Correlation Between Lonza Group and Danaher
Can any of the company-specific risk be diversified away by investing in both Lonza Group and Danaher 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 Lonza Group and Danaher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group AG and Danaher, you can compare the effects of market volatilities on Lonza Group and Danaher 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 Lonza Group with a short position of Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Danaher.
Diversification Opportunities for Lonza Group and Danaher
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lonza and Danaher is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher and Lonza Group 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 Lonza Group AG are associated (or correlated) with Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Lonza Group i.e., Lonza Group and Danaher go up and down completely randomly.
Pair Corralation between Lonza Group and Danaher
Assuming the 90 days horizon Lonza Group AG is expected to under-perform the Danaher. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lonza Group AG is 1.11 times less risky than Danaher. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Danaher is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 24,753 in Danaher on January 25, 2024 and sell it today you would earn a total of 288.00 from holding Danaher or generate 1.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lonza Group AG vs. Danaher
Performance |
Timeline |
Lonza Group AG |
Danaher |
Lonza Group and Danaher Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lonza Group and Danaher
The main advantage of trading using opposite Lonza Group and Danaher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza Group position performs unexpectedly, Danaher 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 Danaher will offset losses from the drop in Danaher's long position.Lonza Group vs. BiodesixInc | Lonza Group vs. Aclaris Therapeutics | Lonza Group vs. Castle Biosciences | Lonza Group vs. Prenetics Global |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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