Correlation Between Laboratory and Illumina

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

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

Diversification Opportunities for Laboratory and Illumina

0.87

Correlation Coefficient

Laboratory  Illumina

Very poor diversification

The 3 months correlation between Laboratory and Illumina is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and Laboratory 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 Laboratory of are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Laboratory i.e., Laboratory and Illumina go up and down completely randomly.

Pair Corralation between Laboratory and Illumina

Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.47 times more return on investment than Illumina. However, Laboratory of is 2.13 times less risky than Illumina. It trades about 0.03 of its potential returns per unit of risk. Illumina is currently generating about -0.04 per unit of risk. If you would invest  17,949  in Laboratory of on February 10, 2024 and sell it today you would earn a total of  2,666  from holding Laboratory of or generate 14.85% return on investment over 90 days.

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

Laboratory of  vs.  Illumina

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Illumina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Illumina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Laboratory and Illumina

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

The idea behind Laboratory of and Illumina 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.