Correlation Between IDEXX Laboratories and Imd Companies

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

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

Diversification Opportunities for IDEXX Laboratories and Imd Companies

-0.63

Correlation Coefficient

IDEXX Laboratories  Imd Companies

Excellent diversification

The 3 months correlation between IDEXX and Imd is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and Imd Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imd Companies and IDEXX Laboratories 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 IDEXX Laboratories are associated (or correlated) with Imd Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imd Companies has no effect on the direction of IDEXX Laboratories i.e., IDEXX Laboratories and Imd Companies go up and down completely randomly.

Pair Corralation between IDEXX Laboratories and Imd Companies

Given the investment horizon of 90 days IDEXX Laboratories is expected to under-perform the Imd Companies. But the stock apears to be less risky and, when comparing its historical volatility, IDEXX Laboratories is 8.84 times less risky than Imd Companies. The stock trades about -0.01 of its potential returns per unit of risk. The Imd Companies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Imd Companies on September 14, 2024 and sell it today you would earn a total of  0.41  from holding Imd Companies or generate 820.0% return on investment over 90 days.

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

IDEXX Laboratories  vs.  Imd Companies

IDEXX Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

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

Imd Companies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imd Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Imd Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDEXX Laboratories and Imd Companies

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

The idea behind IDEXX Laboratories and Imd Companies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.