Correlation Between Thermo Fisher and IQVIA Holdings

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

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

Diversification Opportunities for Thermo Fisher and IQVIA Holdings

0.92

Correlation Coefficient

Thermo Fisher  IQVIA Holdings

Almost no diversification

The 3 months correlation between Thermo and IQVIA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Thermo Fisher and IQVIA Holdings

Assuming the 90 days horizon Thermo Fisher Scientific is expected to generate 0.76 times more return on investment than IQVIA Holdings. However, Thermo Fisher Scientific is 1.31 times less risky than IQVIA Holdings. It trades about -0.1 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.13 per unit of risk. If you would invest  55,641  in Thermo Fisher Scientific on September 3, 2024 and sell it today you would lose (5,371) from holding Thermo Fisher Scientific or give up 9.65% of portfolio value over 90 days.

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

Thermo Fisher Scientific  vs.  IQVIA Holdings

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Thermo Fisher and IQVIA Holdings

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

The idea behind Thermo Fisher Scientific and IQVIA Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.