Correlation Between ICON PLC and Personalis

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

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

Diversification Opportunities for ICON PLC and Personalis

0.64

Correlation Coefficient

ICON PLC  Personalis

Poor diversification

The 3 months correlation between ICON and Personalis is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Personalis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personalis 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 Personalis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Personalis has no effect on the direction of ICON PLC i.e., ICON PLC and Personalis go up and down completely randomly.

Pair Corralation between ICON PLC and Personalis

Given the investment horizon of 90 days ICON PLC is expected to under-perform the Personalis. But the stock apears to be less risky and, when comparing its historical volatility, ICON PLC is 2.91 times less risky than Personalis. The stock trades about -0.17 of its potential returns per unit of risk. The Personalis is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  477.00  in Personalis on September 21, 2024 and sell it today you would earn a total of  98.00  from holding Personalis or generate 20.55% 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.  Personalis

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 unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Personalis

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Personalis are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Personalis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICON PLC and Personalis

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

The idea behind ICON PLC and Personalis 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.