Correlation Between Fortive Corp and Mesa Laboratories

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

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

Diversification Opportunities for Fortive Corp and Mesa Laboratories

0.56

Correlation Coefficient

Fortive Corp  Mesa Laboratories

Very weak diversification

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

Pair Corralation between Fortive Corp and Mesa Laboratories

Considering the 90-day investment horizon Fortive Corp is expected to generate 0.46 times more return on investment than Mesa Laboratories. However, Fortive Corp is 2.18 times less risky than Mesa Laboratories. It trades about -0.07 of its potential returns per unit of risk. Mesa Laboratories is currently generating about -0.19 per unit of risk. If you would invest  5,059  in Fortive Corp on May 6, 2025 and sell it today you would lose (337.00) from holding Fortive Corp or give up 6.66% of portfolio value over 90 days.

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

Fortive Corp  vs.  Mesa Laboratories

Fortive Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fortive Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mesa Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesa Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fortive Corp and Mesa Laboratories

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

The idea behind Fortive Corp and Mesa Laboratories 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.