Correlation Between Vericel Corp and ICON PLC
Can any of the company-specific risk be diversified away by investing in both Vericel Corp and ICON PLC 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 Vericel Corp and ICON PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vericel Corp Ord and ICON PLC, you can compare the effects of market volatilities on Vericel Corp and ICON PLC 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 Vericel Corp with a short position of ICON PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vericel Corp and ICON PLC.
Diversification Opportunities for Vericel Corp and ICON PLC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vericel and ICON is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of Vericel Corp i.e., Vericel Corp and ICON PLC go up and down completely randomly.
Pair Corralation between Vericel Corp and ICON PLC
Given the investment horizon of 90 days Vericel Corp Ord is expected to under-perform the ICON PLC. In addition to that, Vericel Corp is 1.23 times more volatile than ICON PLC. It trades about -0.13 of its total potential returns per unit of risk. ICON PLC is currently generating about -0.11 per unit of volatility. If you would invest 20,964 in ICON PLC on December 28, 2024 and sell it today you would lose (2,953) from holding ICON PLC or give up 14.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.36% |
Values | Daily Returns |
Vericel Corp Ord vs. ICON PLC
Performance |
Timeline |
Vericel Corp Ord |
ICON PLC |
Vericel Corp and ICON PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vericel Corp and ICON PLC
The main advantage of trading using opposite Vericel Corp and ICON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vericel Corp position performs unexpectedly, ICON PLC 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 ICON PLC will offset losses from the drop in ICON PLC's long position.Vericel Corp vs. Collplant Biotechnologies | Vericel Corp vs. Keros Therapeutics | Vericel Corp vs. Merus BV | Vericel Corp vs. Century Therapeutics |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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