Correlation Between Sight Sciences and IDEXX Laboratories

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

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

Diversification Opportunities for Sight Sciences and IDEXX Laboratories

0.91

Correlation Coefficient

Sight Sciences  IDEXX Laboratories

Almost no diversification

The 3 months correlation between Sight and IDEXX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sight Sciences and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and Sight Sciences 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 Sight Sciences 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 Sight Sciences i.e., Sight Sciences and IDEXX Laboratories go up and down completely randomly.

Pair Corralation between Sight Sciences and IDEXX Laboratories

Given the investment horizon of 90 days Sight Sciences is expected to generate 3.17 times more return on investment than IDEXX Laboratories. However, Sight Sciences is 3.17 times more volatile than IDEXX Laboratories. It trades about 0.04 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.04 per unit of risk. If you would invest  329.00  in Sight Sciences on September 13, 2024 and sell it today you would earn a total of  61.00  from holding Sight Sciences or generate 18.54% return on investment over 90 days.

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

Sight Sciences  vs.  IDEXX Laboratories

Sight Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sight Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 conflicting 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 Sight Sciences and IDEXX Laboratories

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

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.