Correlation Between LENSAR and IDEXX Laboratories

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

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

Diversification Opportunities for LENSAR and IDEXX Laboratories

-0.85

Correlation Coefficient

LENSAR  IDEXX Laboratories

Pay attention - limited upside

The 3 months correlation between LENSAR and IDEXX is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and LENSAR 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 LENSAR Inc 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 LENSAR i.e., LENSAR and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between LENSAR and IDEXX Laboratories

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.92 times more return on investment than IDEXX Laboratories. However, LENSAR is 1.92 times more volatile than IDEXX Laboratories. It trades about 0.34 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.09 per unit of risk. If you would invest  545.00  in LENSAR Inc on August 30, 2024 and sell it today you would earn a total of  224.00  from holding LENSAR Inc or generate 41.1% return on investment over 90 days.

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

LENSAR Inc  vs.  IDEXX Laboratories

LENSAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, LENSAR reported 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 LENSAR and IDEXX Laboratories

The main advantage of trading using opposite LENSAR and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR 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 LENSAR Inc 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.