Correlation Between Mettler Toledo and Personalis

Can any of the company-specific risk be diversified away by investing in both Mettler Toledo 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 Mettler Toledo and Personalis 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 Personalis, you can compare the effects of market volatilities on Mettler Toledo 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 Mettler Toledo with a short position of Personalis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mettler Toledo and Personalis.

Diversification Opportunities for Mettler Toledo and Personalis

0.74

Correlation Coefficient

Mettler Toledo  Personalis

Poor diversification

The 3 months correlation between Mettler and Personalis is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mettler Toledo International and Personalis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personalis 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 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 Mettler Toledo i.e., Mettler Toledo and Personalis go up and down completely randomly.

Pair Corralation between Mettler Toledo and Personalis

Considering the 90-day investment horizon Mettler Toledo International is expected to under-perform the Personalis. But the stock apears to be less risky and, when comparing its historical volatility, Mettler Toledo International is 4.89 times less risky than Personalis. The stock trades about -0.09 of its potential returns per unit of risk. The Personalis is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  571.00  in Personalis on September 21, 2024 and sell it today you would earn a total of  4.00  from holding Personalis or generate 0.7% return on investment over 90 days.

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

Mettler Toledo International  vs.  Personalis

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.

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 Mettler Toledo and Personalis

The main advantage of trading using opposite Mettler Toledo and Personalis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mettler Toledo 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 Mettler Toledo International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.