Correlation Between Thermo Fisher and Mettler Toledo

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

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

Diversification Opportunities for Thermo Fisher and Mettler Toledo

0.89

Correlation Coefficient

Thermo Fisher  Mettler Toledo

Very poor diversification

The 3 months correlation between Thermo and Mettler is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Mettler Toledo International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mettler Toledo Inter and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with Mettler Toledo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mettler Toledo Inter has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and Mettler Toledo go up and down completely randomly.

Pair Corralation between Thermo Fisher and Mettler Toledo

Considering the 90-day investment horizon Thermo Fisher Scientific is expected to generate 0.72 times more return on investment than Mettler Toledo. However, Thermo Fisher Scientific is 1.39 times less risky than Mettler Toledo. It trades about 0.0 of its potential returns per unit of risk. Mettler Toledo International is currently generating about 0.0 per unit of risk. If you would invest  53,885  in Thermo Fisher Scientific on November 19, 2024 and sell it today you would lose (700.00) from holding Thermo Fisher Scientific or give up 1.3% of portfolio value over 90 days.

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

Thermo Fisher Scientific  vs.  Mettler Toledo International

Thermo Fisher Scientific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mettler Toledo Inter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mettler Toledo International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Mettler Toledo may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Thermo Fisher and Mettler Toledo

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

The idea behind Thermo Fisher Scientific and Mettler Toledo International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.