Correlation Between Vertex Pharmaceuticals and Thermo Fisher

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

By analyzing existing cross correlation between Vertex Pharmaceuticals and Thermo Fisher Scientific, you can compare the effects of market volatilities on Vertex Pharmaceuticals and Thermo Fisher 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 Vertex Pharmaceuticals with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertex Pharmaceuticals and Thermo Fisher.

Diversification Opportunities for Vertex Pharmaceuticals and Thermo Fisher

0.49

Correlation Coefficient

Vertex Pharmaceuticals  Thermo Fisher

Very weak diversification

The 3 months correlation between Vertex and Thermo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vertex Pharmaceuticals and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and Vertex Pharmaceuticals 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 Vertex Pharmaceuticals are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Vertex Pharmaceuticals i.e., Vertex Pharmaceuticals and Thermo Fisher go up and down completely randomly.

Pair Corralation between Vertex Pharmaceuticals and Thermo Fisher

Given the investment horizon of 90 days Vertex Pharmaceuticals is expected to generate 1.71 times less return on investment than Thermo Fisher. But when comparing it to its historical volatility, Vertex Pharmaceuticals is 1.63 times less risky than Thermo Fisher. It trades about 0.1 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  40,743  in Thermo Fisher Scientific on May 7, 2025 and sell it today you would earn a total of  5,914  from holding Thermo Fisher Scientific or generate 14.52% return on investment over 90 days.

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

Vertex Pharmaceuticals  vs.  Thermo Fisher Scientific

Vertex Pharmaceuticals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vertex Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Thermo Fisher Scientific

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Thermo Fisher displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertex Pharmaceuticals and Thermo Fisher

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

The idea behind Vertex Pharmaceuticals and Thermo Fisher Scientific 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.