Correlation Between ICON PLC and Twist Bioscience

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

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

Diversification Opportunities for ICON PLC and Twist Bioscience

0.44

Correlation Coefficient

ICON PLC  Twist Bioscience

Very weak diversification

The 3 months correlation between ICON and Twist is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Twist Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twist Bioscience Corp and ICON PLC 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 ICON PLC are associated (or correlated) with Twist Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twist Bioscience Corp has no effect on the direction of ICON PLC i.e., ICON PLC and Twist Bioscience go up and down completely randomly.

Pair Corralation between ICON PLC and Twist Bioscience

Given the investment horizon of 90 days ICON PLC is expected to under-perform the Twist Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, ICON PLC is 1.86 times less risky than Twist Bioscience. The stock trades about -0.13 of its potential returns per unit of risk. The Twist Bioscience Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,817  in Twist Bioscience Corp on December 27, 2024 and sell it today you would lose (629.00) from holding Twist Bioscience Corp or give up 13.06% of portfolio value over 90 days.

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

ICON PLC  vs.  Twist Bioscience Corp

ICON PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Twist Bioscience Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Twist Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ICON PLC and Twist Bioscience

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

The idea behind ICON PLC and Twist Bioscience Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.