Correlation Between Vericel Corp and IQVIA Holdings

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

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

Diversification Opportunities for Vericel Corp and IQVIA Holdings

-0.54

Correlation Coefficient

Vericel Corp  IQVIA Holdings

Excellent diversification

The 3 months correlation between Vericel and IQVIA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings and Vericel Corp 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 Vericel Corp Ord 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 Vericel Corp i.e., Vericel Corp and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Vericel Corp and IQVIA Holdings

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 1.51 times more return on investment than IQVIA Holdings. However, Vericel Corp is 1.51 times more volatile than IQVIA Holdings. It trades about 0.08 of its potential returns per unit of risk. IQVIA Holdings is currently generating about 0.0 per unit of risk. If you would invest  3,406  in Vericel Corp Ord on September 3, 2024 and sell it today you would earn a total of  2,468  from holding Vericel Corp Ord or generate 72.46% return on investment over 90 days.

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

Vericel Corp Ord  vs.  IQVIA Holdings

Vericel Corp Ord

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Vericel Corp and IQVIA Holdings

The main advantage of trading using opposite Vericel Corp and IQVIA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vericel Corp 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 Vericel Corp Ord 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.