Correlation Between Danaher and T2 Biosystms

Can any of the company-specific risk be diversified away by investing in both Danaher and T2 Biosystms 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 Danaher and T2 Biosystms into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Danaher and T2 Biosystms, you can compare the effects of market volatilities on Danaher and T2 Biosystms 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 Danaher with a short position of T2 Biosystms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and T2 Biosystms.

Diversification Opportunities for Danaher and T2 Biosystms

0.94

Correlation Coefficient

Danaher  T2 Biosystms

Almost no diversification

The 3 months correlation between Danaher and TTOO is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and T2 Biosystms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T2 Biosystms and Danaher 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 Danaher are associated (or correlated) with T2 Biosystms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T2 Biosystms has no effect on the direction of Danaher i.e., Danaher and T2 Biosystms go up and down completely randomly.

Pair Corralation between Danaher and T2 Biosystms

Considering the 90-day investment horizon Danaher is expected to generate 0.12 times more return on investment than T2 Biosystms. However, Danaher is 8.01 times less risky than T2 Biosystms. It trades about 0.1 of its potential returns per unit of risk. T2 Biosystms is currently generating about -0.21 per unit of risk. If you would invest  23,407  in Danaher on October 11, 2024 and sell it today you would earn a total of  402.00  from holding Danaher or generate 1.72% return on investment over 90 days.

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

Danaher  vs.  T2 Biosystms

Danaher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

T2 Biosystms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T2 Biosystms 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Danaher and T2 Biosystms

The main advantage of trading using opposite Danaher and T2 Biosystms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, T2 Biosystms 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 T2 Biosystms will offset losses from the drop in T2 Biosystms' long position.

The idea behind Danaher and T2 Biosystms 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.