Correlation Between IDEXX Laboratories and Ecclesiastical Insurance

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

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

Diversification Opportunities for IDEXX Laboratories and Ecclesiastical Insurance

0.23

Correlation Coefficient

IDEXX Laboratories  Ecclesiastical Insurance

Modest diversification

The 3 months correlation between IDEXX and Ecclesiastical is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance and IDEXX Laboratories 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 IDEXX Laboratories are associated (or correlated) with Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of IDEXX Laboratories i.e., IDEXX Laboratories and Ecclesiastical Insurance go up and down completely randomly.

Pair Corralation between IDEXX Laboratories and Ecclesiastical Insurance

Assuming the 90 days trading horizon IDEXX Laboratories is expected to under-perform the Ecclesiastical Insurance. In addition to that, IDEXX Laboratories is 1.95 times more volatile than Ecclesiastical Insurance Office. It trades about -0.16 of its total potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.0 per unit of volatility. If you would invest  13,164  in Ecclesiastical Insurance Office on September 24, 2024 and sell it today you would lose (14.00) from holding Ecclesiastical Insurance Office or give up 0.11% of portfolio value over 90 days.

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

IDEXX Laboratories  vs.  Ecclesiastical Insurance Offic

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ecclesiastical Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecclesiastical Insurance Office has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ecclesiastical Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IDEXX Laboratories and Ecclesiastical Insurance

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

The idea behind IDEXX Laboratories and Ecclesiastical Insurance Office 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.