Correlation Between 23Andme Holding and IDEXX Laboratories

Can any of the company-specific risk be diversified away by investing in both 23Andme Holding and IDEXX 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 23Andme Holding and IDEXX Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 23Andme Holding Co and IDEXX Laboratories, you can compare the effects of market volatilities on 23Andme Holding and IDEXX 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 23Andme Holding with a short position of IDEXX Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23Andme Holding and IDEXX Laboratories.

Diversification Opportunities for 23Andme Holding and IDEXX Laboratories

-0.13

Correlation Coefficient

23Andme Holding  IDEXX Laboratories

Good diversification

The 3 months correlation between 23Andme and IDEXX is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding 23Andme Holding Co and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and 23Andme Holding 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 23Andme Holding Co are associated (or correlated) with IDEXX Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEXX Laboratories has no effect on the direction of 23Andme Holding i.e., 23Andme Holding and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between 23Andme Holding and IDEXX Laboratories

Allowing for the 90-day total investment horizon 23Andme Holding Co is expected to under-perform the IDEXX Laboratories. In addition to that, 23Andme Holding is 4.79 times more volatile than IDEXX Laboratories. It trades about -0.09 of its total potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.14 per unit of volatility. If you would invest  49,499  in IDEXX Laboratories on July 22, 2024 and sell it today you would lose (3,725) from holding IDEXX Laboratories or give up 7.53% of portfolio value over 90 days.

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

23Andme Holding Co  vs.  IDEXX Laboratories

23Andme Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 23Andme Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IDEXX Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 23Andme Holding and IDEXX Laboratories

The main advantage of trading using opposite 23Andme Holding and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23Andme Holding position performs unexpectedly, IDEXX 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 IDEXX Laboratories will offset losses from the drop in IDEXX Laboratories' long position.

The idea behind 23Andme Holding Co and IDEXX 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.