Correlation Between Charles River and IQVIA Holdings

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

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

Diversification Opportunities for Charles River and IQVIA Holdings

0.21

Correlation Coefficient

Charles River  IQVIA Holdings

Modest diversification

The 3 months correlation between Charles and IQVIA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Charles River Laboratories and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings and Charles River 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 Charles River Laboratories are associated (or correlated) with IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of Charles River i.e., Charles River and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Charles River and IQVIA Holdings

Considering the 90-day investment horizon Charles River Laboratories is expected to under-perform the IQVIA Holdings. In addition to that, Charles River is 1.46 times more volatile than IQVIA Holdings. It trades about -0.09 of its total potential returns per unit of risk. IQVIA Holdings is currently generating about -0.09 per unit of volatility. If you would invest  19,745  in IQVIA Holdings on December 28, 2024 and sell it today you would lose (1,809) from holding IQVIA Holdings or give up 9.16% of portfolio value over 90 days.

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

Charles River Laboratories  vs.  IQVIA Holdings

Charles River Labora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charles River Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

IQVIA Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Charles River and IQVIA Holdings

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

The idea behind Charles River Laboratories and IQVIA Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.