Correlation Between Mirion Technologies and Xylem

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

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

Diversification Opportunities for Mirion Technologies and Xylem

-0.71

Correlation Coefficient

Mirion Technologies  Xylem

Pay attention - limited upside

The 3 months correlation between Mirion and Xylem is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mirion Technologies and Xylem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xylem Inc and Mirion Technologies 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 Mirion Technologies are associated (or correlated) with Xylem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xylem Inc has no effect on the direction of Mirion Technologies i.e., Mirion Technologies and Xylem go up and down completely randomly.

Pair Corralation between Mirion Technologies and Xylem

Considering the 90-day investment horizon Mirion Technologies is expected to generate 1.39 times more return on investment than Xylem. However, Mirion Technologies is 1.39 times more volatile than Xylem Inc. It trades about -0.12 of its potential returns per unit of risk. Xylem Inc is currently generating about -0.26 per unit of risk. If you would invest  1,812  in Mirion Technologies on October 7, 2024 and sell it today you would lose (89.00) from holding Mirion Technologies or give up 4.91% of portfolio value over 90 days.

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

Mirion Technologies  vs.  Xylem Inc

Mirion Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirion Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Mirion Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Xylem Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xylem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Mirion Technologies and Xylem

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

The idea behind Mirion Technologies and Xylem Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.