Correlation Between Waters and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Waters and ICON PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Waters and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waters and ICON PLC, you can compare the effects of market volatilities on Waters and ICON PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Waters with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waters and ICON PLC.
Diversification Opportunities for Waters and ICON PLC
Very good diversification
The 3 months correlation between Waters and ICON is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Waters and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Waters is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Waters are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Waters i.e., Waters and ICON PLC go up and down completely randomly.
Pair Corralation between Waters and ICON PLC
Considering the 90-day investment horizon Waters is expected to generate 0.91 times more return on investment than ICON PLC. However, Waters is 1.1 times less risky than ICON PLC. It trades about 0.05 of its potential returns per unit of risk. ICON PLC is currently generating about -0.1 per unit of risk. If you would invest 33,184 in Waters on August 24, 2024 and sell it today you would earn a total of 3,666 from holding Waters or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Waters vs. ICON PLC
Performance |
| Timeline |
| Waters |
| ICON PLC |
Waters and ICON PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waters and ICON PLC
The main advantage of trading using opposite Waters and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters position performs unexpectedly, ICON PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ICON PLC will offset losses from the drop in ICON PLC's long position.| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
| ICON PLC vs. Mettler Toledo International | ICON PLC vs. Charles River Laboratories | ICON PLC vs. Laboratory of | ICON PLC vs. Neogen |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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