Correlation Between Mettler Toledo and EXACT Sciences

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

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

Diversification Opportunities for Mettler Toledo and EXACT Sciences

0.68

Correlation Coefficient

Mettler Toledo  EXACT Sciences

Poor diversification

The 3 months correlation between Mettler and EXACT is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences and Mettler Toledo 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 Mettler Toledo International are associated (or correlated) with EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of Mettler Toledo i.e., Mettler Toledo and EXACT Sciences go up and down completely randomly.

Pair Corralation between Mettler Toledo and EXACT Sciences

Considering the 90-day investment horizon Mettler Toledo International is expected to under-perform the EXACT Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Mettler Toledo International is 2.06 times less risky than EXACT Sciences. The stock trades about -0.1 of its potential returns per unit of risk. The EXACT Sciences is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,964  in EXACT Sciences on September 21, 2024 and sell it today you would lose (1,024) from holding EXACT Sciences or give up 14.7% of portfolio value over 90 days.

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

Mettler Toledo International  vs.  EXACT Sciences

Mettler Toledo Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mettler Toledo International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

EXACT Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXACT Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mettler Toledo and EXACT Sciences

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

The idea behind Mettler Toledo International and EXACT Sciences 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 Directory module to find actively traded commodities issued by global exchanges.