Correlation Between Envista Holdings and Abcellera Biologics

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

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

Diversification Opportunities for Envista Holdings and Abcellera Biologics

0.37

Correlation Coefficient

Envista Holdings  Abcellera Biologics

Weak diversification

The 3 months correlation between Envista and Abcellera is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and Envista 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 Envista Holdings Corp are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Envista Holdings i.e., Envista Holdings and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Envista Holdings and Abcellera Biologics

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the Abcellera Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Envista Holdings Corp is 1.7 times less risky than Abcellera Biologics. The stock trades about -0.08 of its potential returns per unit of risk. The Abcellera Biologics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  302.00  in Abcellera Biologics on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Abcellera Biologics or generate 0.33% return on investment over 90 days.

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

Envista Holdings Corp  vs.  Abcellera Biologics

Envista Holdings Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Abcellera Biologics

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Abcellera Biologics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envista Holdings and Abcellera Biologics

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

The idea behind Envista Holdings Corp and Abcellera Biologics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.