Correlation Between Revvity and Waters

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

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

Diversification Opportunities for Revvity and Waters

0.86

Correlation Coefficient

Revvity  Waters

Very poor diversification

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

Pair Corralation between Revvity and Waters

Given the investment horizon of 90 days Revvity is expected to generate 2.5 times less return on investment than Waters. In addition to that, Revvity is 1.06 times more volatile than Waters. It trades about 0.03 of its total potential returns per unit of risk. Waters is currently generating about 0.07 per unit of volatility. If you would invest  34,471  in Waters on November 19, 2024 and sell it today you would earn a total of  2,502  from holding Waters or generate 7.26% return on investment over 90 days.

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

Revvity  vs.  Waters

Revvity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Revvity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Revvity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Waters

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Revvity and Waters

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

The idea behind Revvity and Waters 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..