Correlation Between Quest Diagnostics and IQVIA Holdings

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

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

Diversification Opportunities for Quest Diagnostics and IQVIA Holdings

-0.65

Correlation Coefficient

Quest Diagnostics  IQVIA Holdings

Excellent diversification

The 3 months correlation between Quest and IQVIA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics Incorporated and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings and Quest Diagnostics 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 Quest Diagnostics Incorporated 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 Quest Diagnostics i.e., Quest Diagnostics and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Quest Diagnostics and IQVIA Holdings

Considering the 90-day investment horizon Quest Diagnostics Incorporated is expected to generate 0.67 times more return on investment than IQVIA Holdings. However, Quest Diagnostics Incorporated is 1.49 times less risky than IQVIA Holdings. It trades about 0.07 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.07 per unit of risk. If you would invest  13,950  in Quest Diagnostics Incorporated on February 28, 2024 and sell it today you would earn a total of  178.00  from holding Quest Diagnostics Incorporated or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Quest Diagnostics Incorporated  vs.  IQVIA Holdings

Quest Diagnostics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quest Diagnostics Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Quest Diagnostics showed 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 latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Quest Diagnostics and IQVIA Holdings

The main advantage of trading using opposite Quest Diagnostics and IQVIA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quest Diagnostics 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 Quest Diagnostics Incorporated 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.