Correlation Between IQVIA Holdings and ICON PLC

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

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

Diversification Opportunities for IQVIA Holdings and ICON PLC

0.67

Correlation Coefficient

IQVIA Holdings  ICON PLC

Poor diversification

The 3 months correlation between IQVIA and ICON is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding IQVIA Holdings and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and IQVIA Holdings 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 IQVIA Holdings are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of IQVIA Holdings i.e., IQVIA Holdings and ICON PLC go up and down completely randomly.

Pair Corralation between IQVIA Holdings and ICON PLC

Considering the 90-day investment horizon IQVIA Holdings is expected to generate 0.78 times more return on investment than ICON PLC. However, IQVIA Holdings is 1.29 times less risky than ICON PLC. It trades about -0.1 of its potential returns per unit of risk. ICON PLC is currently generating about -0.13 per unit of risk. If you would invest  19,939  in IQVIA Holdings on December 27, 2024 and sell it today you would lose (1,937) from holding IQVIA Holdings or give up 9.71% of portfolio value over 90 days.

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

IQVIA Holdings  vs.  ICON PLC

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.

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.

Pair Trading with IQVIA Holdings and ICON PLC

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

The idea behind IQVIA Holdings and ICON PLC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.