Correlation Between IQVIA Holdings and Danaher

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

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

Diversification Opportunities for IQVIA Holdings and Danaher

0.89

Correlation Coefficient

IQVIA Holdings  Danaher

Very poor diversification

The 3 months correlation between IQVIA and Danaher is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding IQVIA Holdings and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher and IQVIA Holdings 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 IQVIA Holdings are associated (or correlated) with Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of IQVIA Holdings i.e., IQVIA Holdings and Danaher go up and down completely randomly.

Pair Corralation between IQVIA Holdings and Danaher

Considering the 90-day investment horizon IQVIA Holdings is expected to under-perform the Danaher. In addition to that, IQVIA Holdings is 1.43 times more volatile than Danaher. It trades about -0.17 of its total potential returns per unit of risk. Danaher is currently generating about -0.11 per unit of volatility. If you would invest  26,397  in Danaher on September 1, 2024 and sell it today you would lose (2,428) from holding Danaher or give up 9.2% of portfolio value over 90 days.

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

IQVIA Holdings  vs.  Danaher

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Danaher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danaher has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with IQVIA Holdings and Danaher

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

The idea behind IQVIA Holdings and Danaher 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.