Correlation Between ICON PLC and Qiagen NV

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

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

Diversification Opportunities for ICON PLC and Qiagen NV

0.65

Correlation Coefficient

ICON PLC  Qiagen NV

Poor diversification

The 3 months correlation between ICON and Qiagen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Qiagen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiagen NV and ICON PLC 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 ICON PLC are associated (or correlated) with Qiagen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiagen NV has no effect on the direction of ICON PLC i.e., ICON PLC and Qiagen NV go up and down completely randomly.

Pair Corralation between ICON PLC and Qiagen NV

Given the investment horizon of 90 days ICON PLC is expected to generate 1.31 times more return on investment than Qiagen NV. However, ICON PLC is 1.31 times more volatile than Qiagen NV. It trades about 0.22 of its potential returns per unit of risk. Qiagen NV is currently generating about 0.06 per unit of risk. If you would invest  30,107  in ICON PLC on March 3, 2024 and sell it today you would earn a total of  2,375  from holding ICON PLC or generate 7.89% return on investment over 90 days.

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

ICON PLC  vs.  Qiagen NV

ICON PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, ICON PLC is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Qiagen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qiagen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Qiagen NV is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ICON PLC and Qiagen NV

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

The idea behind ICON PLC and Qiagen NV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.