Correlation Between Waters and IDEXX Laboratories

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

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

Diversification Opportunities for Waters and IDEXX Laboratories

-0.32

Correlation Coefficient

Waters  IDEXX Laboratories

Very good diversification

The 3 months correlation between Waters and IDEXX is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Waters and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and Waters 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 Waters 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 Waters i.e., Waters and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between Waters and IDEXX Laboratories

Considering the 90-day investment horizon Waters is expected to under-perform the IDEXX Laboratories. In addition to that, Waters is 1.79 times more volatile than IDEXX Laboratories. It trades about -0.1 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  47,507  in IDEXX Laboratories on May 5, 2025 and sell it today you would earn a total of  6,047  from holding IDEXX Laboratories or generate 12.73% return on investment over 90 days.

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

Waters  vs.  IDEXX Laboratories

Waters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waters 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 basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

IDEXX Laboratories

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IDEXX Laboratories are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, IDEXX Laboratories showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waters and IDEXX Laboratories

The main advantage of trading using opposite Waters and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters 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 Waters 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.