Correlation Between IQVIA Holdings and Thermo Fisher

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

By analyzing existing cross correlation between IQVIA Holdings and Thermo Fisher Scientific, you can compare the effects of market volatilities on IQVIA Holdings and Thermo Fisher 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 Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQVIA Holdings and Thermo Fisher.

Diversification Opportunities for IQVIA Holdings and Thermo Fisher

0.86

Correlation Coefficient

IQVIA Holdings  Thermo Fisher

Very poor diversification

The 3 months correlation between IQVIA and Thermo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IQVIA Holdings and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of IQVIA Holdings i.e., IQVIA Holdings and Thermo Fisher go up and down completely randomly.

Pair Corralation between IQVIA Holdings and Thermo Fisher

Assuming the 90 days horizon IQVIA Holdings is expected to under-perform the Thermo Fisher. But the stock apears to be less risky and, when comparing its historical volatility, IQVIA Holdings is 1.04 times less risky than Thermo Fisher. The stock trades about -0.12 of its potential returns per unit of risk. The Thermo Fisher Scientific is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  50,118  in Thermo Fisher Scientific on December 29, 2024 and sell it today you would lose (2,223) from holding Thermo Fisher Scientific or give up 4.44% of portfolio value over 90 days.

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

IQVIA Holdings  vs.  Thermo Fisher Scientific

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Thermo Fisher Scientific

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IQVIA Holdings and Thermo Fisher

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

The idea behind IQVIA Holdings and Thermo Fisher Scientific 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.