Correlation Between Vericel Corp and Thermo Fisher

Can any of the company-specific risk be diversified away by investing in both Vericel Corp and Thermo Fisher 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 Thermo Fisher 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 Thermo Fisher Scientific, you can compare the effects of market volatilities on Vericel Corp and Thermo Fisher 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 Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vericel Corp and Thermo Fisher.

Diversification Opportunities for Vericel Corp and Thermo Fisher

-0.7

Correlation Coefficient

Vericel Corp  Thermo Fisher

Excellent diversification

The 3 months correlation between Vericel and Thermo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Vericel Corp i.e., Vericel Corp and Thermo Fisher go up and down completely randomly.

Pair Corralation between Vericel Corp and Thermo Fisher

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 2.35 times more return on investment than Thermo Fisher. However, Vericel Corp is 2.35 times more volatile than Thermo Fisher Scientific. It trades about 0.11 of its potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.17 per unit of risk. If you would invest  4,904  in Vericel Corp Ord on September 1, 2024 and sell it today you would earn a total of  910.00  from holding Vericel Corp Ord or generate 18.56% return on investment over 90 days.

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

Vericel Corp Ord  vs.  Thermo Fisher Scientific

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 weak technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vericel Corp and Thermo Fisher

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

The idea behind Vericel Corp Ord and Thermo Fisher Scientific 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.