Correlation Between Bio Rad and Third Avenue

Can any of the company-specific risk be diversified away by investing in both Bio Rad and Third Avenue 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 Third Avenue 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 Third Avenue Small Cap, you can compare the effects of market volatilities on Bio Rad and Third Avenue 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 Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Rad and Third Avenue.

Diversification Opportunities for Bio Rad and Third Avenue

0.56

Correlation Coefficient

Bio Rad  Third Avenue

Very weak diversification

The 3 months correlation between Bio and Third is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bio Rad Laboratories and Third Avenue Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Small 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Small has no effect on the direction of Bio Rad i.e., Bio Rad and Third Avenue go up and down completely randomly.

Pair Corralation between Bio Rad and Third Avenue

Considering the 90-day investment horizon Bio Rad is expected to generate 1.77 times less return on investment than Third Avenue. In addition to that, Bio Rad is 2.41 times more volatile than Third Avenue Small Cap. It trades about 0.04 of its total potential returns per unit of risk. Third Avenue Small Cap is currently generating about 0.16 per unit of volatility. If you would invest  1,756  in Third Avenue Small Cap on May 1, 2025 and sell it today you would earn a total of  181.00  from holding Third Avenue Small Cap or generate 10.31% return on investment over 90 days.

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

Bio Rad Laboratories  vs.  Third Avenue Small Cap

Bio Rad Laboratories

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Rad Laboratories are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Bio Rad is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Third Avenue Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Third Avenue Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Third Avenue may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Bio Rad and Third Avenue

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

The idea behind Bio Rad Laboratories and Third Avenue Small Cap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.