Correlation Between Sherborne Investors and IDEXX Laboratories

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

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

Diversification Opportunities for Sherborne Investors and IDEXX Laboratories

-0.58

Correlation Coefficient

Sherborne Investors  IDEXX Laboratories

Excellent diversification

The 3 months correlation between Sherborne and IDEXX is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sherborne Investors Guernsey and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and Sherborne Investors 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 Sherborne Investors Guernsey are associated (or correlated) with IDEXX Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEXX Laboratories has no effect on the direction of Sherborne Investors i.e., Sherborne Investors and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between Sherborne Investors and IDEXX Laboratories

Assuming the 90 days trading horizon Sherborne Investors Guernsey is expected to generate 0.39 times more return on investment than IDEXX Laboratories. However, Sherborne Investors Guernsey is 2.56 times less risky than IDEXX Laboratories. It trades about 0.08 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.14 per unit of risk. If you would invest  5,100  in Sherborne Investors Guernsey on September 17, 2024 and sell it today you would earn a total of  175.00  from holding Sherborne Investors Guernsey or generate 3.43% return on investment over 90 days.

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

Sherborne Investors Guernsey  vs.  IDEXX Laboratories

Sherborne Investors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sherborne Investors Guernsey are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sherborne Investors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

IDEXX Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDEXX Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sherborne Investors and IDEXX Laboratories

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

The idea behind Sherborne Investors Guernsey and IDEXX Laboratories 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.