Correlation Between IQVIA Holdings and Illumina

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

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

Diversification Opportunities for IQVIA Holdings and Illumina

-0.47

Correlation Coefficient

IQVIA Holdings  Illumina

Very good diversification

The 3 months correlation between IQVIA and Illumina is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding IQVIA Holdings and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 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 IQVIA Holdings i.e., IQVIA Holdings and Illumina go up and down completely randomly.

Pair Corralation between IQVIA Holdings and Illumina

Considering the 90-day investment horizon IQVIA Holdings is expected to under-perform the Illumina. But the stock apears to be less risky and, when comparing its historical volatility, IQVIA Holdings is 1.24 times less risky than Illumina. The stock trades about -0.17 of its potential returns per unit of risk. The Illumina is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13,026  in Illumina on September 1, 2024 and sell it today you would earn a total of  1,389  from holding Illumina or generate 10.66% return on investment over 90 days.

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

IQVIA Holdings  vs.  Illumina

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.

Illumina

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Illumina may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IQVIA Holdings and Illumina

The main advantage of trading using opposite IQVIA Holdings and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQVIA Holdings 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 IQVIA Holdings 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.