Correlation Between Revvity and Illumina

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

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

Diversification Opportunities for Revvity and Illumina

0.06

Correlation Coefficient

Revvity  Illumina

Significant diversification

The 3 months correlation between Revvity and Illumina is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Revvity and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and Revvity 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 Revvity 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 Revvity i.e., Revvity and Illumina go up and down completely randomly.

Pair Corralation between Revvity and Illumina

Given the investment horizon of 90 days Revvity is expected to under-perform the Illumina. But the stock apears to be less risky and, when comparing its historical volatility, Revvity is 1.38 times less risky than Illumina. The stock trades about -0.04 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  13,140  in Illumina on August 30, 2024 and sell it today you would earn a total of  1,296  from holding Illumina or generate 9.86% return on investment over 90 days.

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

Revvity  vs.  Illumina

Revvity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revvity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Revvity is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Illumina

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 5 (%) 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 Revvity and Illumina

The main advantage of trading using opposite Revvity and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revvity 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 Revvity 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.