Correlation Between Caredx and Mettler Toledo

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

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

Diversification Opportunities for Caredx and Mettler Toledo

0.75

Correlation Coefficient

Caredx  Mettler Toledo

Poor diversification

The 3 months correlation between Caredx and Mettler is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Caredx Inc and Mettler Toledo International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mettler Toledo Inter and Caredx 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 Caredx Inc are associated (or correlated) with Mettler Toledo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mettler Toledo Inter has no effect on the direction of Caredx i.e., Caredx and Mettler Toledo go up and down completely randomly.

Pair Corralation between Caredx and Mettler Toledo

Given the investment horizon of 90 days Caredx Inc is expected to generate 2.84 times more return on investment than Mettler Toledo. However, Caredx is 2.84 times more volatile than Mettler Toledo International. It trades about 0.01 of its potential returns per unit of risk. Mettler Toledo International is currently generating about -0.08 per unit of risk. If you would invest  2,407  in Caredx Inc on October 11, 2024 and sell it today you would lose (7.00) from holding Caredx Inc or give up 0.29% of portfolio value over 90 days.

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

Caredx Inc  vs.  Mettler Toledo International

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mettler Toledo Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mettler Toledo International 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Caredx and Mettler Toledo

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

The idea behind Caredx Inc and Mettler Toledo International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.