Correlation Between Lantheus Holdings and INC Research

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

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

Diversification Opportunities for Lantheus Holdings and INC Research

0.7

Correlation Coefficient

Lantheus Holdings  INC Research

Poor diversification

The 3 months correlation between Lantheus and INC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lantheus Holdings and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings and Lantheus 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 Lantheus Holdings are associated (or correlated) with INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Lantheus Holdings i.e., Lantheus Holdings and INC Research go up and down completely randomly.

Pair Corralation between Lantheus Holdings and INC Research

Given the investment horizon of 90 days Lantheus Holdings is expected to generate 0.77 times more return on investment than INC Research. However, Lantheus Holdings is 1.3 times less risky than INC Research. It trades about 0.04 of its potential returns per unit of risk. INC Research Holdings is currently generating about -0.01 per unit of risk. If you would invest  5,627  in Lantheus Holdings on October 21, 2024 and sell it today you would earn a total of  3,520  from holding Lantheus Holdings or generate 62.56% return on investment over 90 days.

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

Lantheus Holdings  vs.  INC Research Holdings

Lantheus Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantheus Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

INC Research Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INC Research Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, INC Research may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lantheus Holdings and INC Research

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

The idea behind Lantheus Holdings and INC Research Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.