Correlation Between Quest Diagnostics and Senseonics Holdings

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

Diversification Opportunities for Quest Diagnostics and Senseonics Holdings

-0.57

Correlation Coefficient

Quest Diagnostics  Senseonics Holdings

Excellent diversification

The 3 months correlation between Quest and Senseonics is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics Incorporated and Senseonics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senseonics 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 Senseonics Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senseonics Holdings has no effect on the direction of Quest Diagnostics i.e., Quest Diagnostics and Senseonics Holdings go up and down completely randomly.

Pair Corralation between Quest Diagnostics and Senseonics Holdings

Considering the 90-day investment horizon Quest Diagnostics Incorporated is expected to generate 0.3 times more return on investment than Senseonics Holdings. However, Quest Diagnostics Incorporated is 3.31 times less risky than Senseonics Holdings. It trades about 0.16 of its potential returns per unit of risk. Senseonics Holdings is currently generating about -0.09 per unit of risk. If you would invest  12,460  in Quest Diagnostics Incorporated on March 4, 2024 and sell it today you would earn a total of  1,737  from holding Quest Diagnostics Incorporated or generate 13.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Quest Diagnostics Incorporated  vs.  Senseonics 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.

Senseonics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senseonics Holdings 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 basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Quest Diagnostics and Senseonics Holdings

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

The idea behind Quest Diagnostics Incorporated and Senseonics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.