Correlation Between Bio Rad and Laboratory

Can any of the company-specific risk be diversified away by investing in both Bio Rad and Laboratory 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 Bio Rad and Laboratory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bio Rad Laboratories and Laboratory of, you can compare the effects of market volatilities on Bio Rad and Laboratory 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 Bio Rad with a short position of Laboratory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Rad and Laboratory.

Diversification Opportunities for Bio Rad and Laboratory

0.72

Correlation Coefficient

Bio Rad  Laboratory

Poor diversification

The 3 months correlation between Bio and Laboratory is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bio Rad Laboratories and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory and Bio Rad 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 Bio Rad Laboratories are associated (or correlated) with Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Bio Rad i.e., Bio Rad and Laboratory go up and down completely randomly.

Pair Corralation between Bio Rad and Laboratory

Considering the 90-day investment horizon Bio Rad Laboratories is expected to under-perform the Laboratory. In addition to that, Bio Rad is 1.53 times more volatile than Laboratory of. It trades about -0.29 of its total potential returns per unit of risk. Laboratory of is currently generating about -0.14 per unit of volatility. If you would invest  21,126  in Laboratory of on February 5, 2024 and sell it today you would lose (994.00) from holding Laboratory of or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bio Rad Laboratories  vs.  Laboratory of

Bio Rad Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Rad Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Bio Rad and Laboratory

The main advantage of trading using opposite Bio Rad and Laboratory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Rad position performs unexpectedly, Laboratory 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 Laboratory will offset losses from the drop in Laboratory's long position.

The idea behind Bio Rad Laboratories and Laboratory of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.