Correlation Between Mettler Toledo and IDEXX Laboratories

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

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

Diversification Opportunities for Mettler Toledo and IDEXX Laboratories

0.16

Correlation Coefficient

Mettler Toledo  IDEXX Laboratories

Average diversification

The 3 months correlation between Mettler and IDEXX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and Mettler Toledo 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 Mettler Toledo International 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 Mettler Toledo i.e., Mettler Toledo and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between Mettler Toledo and IDEXX Laboratories

Considering the 90-day investment horizon Mettler Toledo International is expected to generate 1.62 times more return on investment than IDEXX Laboratories. However, Mettler Toledo is 1.62 times more volatile than IDEXX Laboratories. It trades about 0.08 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.06 per unit of risk. If you would invest  134,120  in Mettler Toledo International on February 28, 2024 and sell it today you would earn a total of  12,905  from holding Mettler Toledo International or generate 9.62% return on investment over 90 days.

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

Mettler Toledo International  vs.  IDEXX Laboratories

Mettler Toledo Inter

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mettler Toledo International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Mettler Toledo exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mettler Toledo and IDEXX Laboratories

The main advantage of trading using opposite Mettler Toledo and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mettler Toledo 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 Mettler Toledo International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.