Correlation Between Dover and Mirion Technologies

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

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

Diversification Opportunities for Dover and Mirion Technologies

-0.17

Correlation Coefficient

Dover  Mirion Technologies

Good diversification

The 3 months correlation between Dover and Mirion is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Mirion Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirion Technologies and Dover 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 Dover are associated (or correlated) with Mirion Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirion Technologies has no effect on the direction of Dover i.e., Dover and Mirion Technologies go up and down completely randomly.

Pair Corralation between Dover and Mirion Technologies

Considering the 90-day investment horizon Dover is expected to generate 0.31 times more return on investment than Mirion Technologies. However, Dover is 3.22 times less risky than Mirion Technologies. It trades about 0.16 of its potential returns per unit of risk. Mirion Technologies is currently generating about -0.04 per unit of risk. If you would invest  18,515  in Dover on December 2, 2024 and sell it today you would earn a total of  1,362  from holding Dover or generate 7.36% return on investment over 90 days.

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

Dover  vs.  Mirion Technologies

Dover

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dover has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dover is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mirion Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirion Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Mirion Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dover and Mirion Technologies

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

The idea behind Dover and Mirion Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.