Correlation Between MeiraGTx Holdings and ICON PLC

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

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

Diversification Opportunities for MeiraGTx Holdings and ICON PLC

-0.28

Correlation Coefficient

MeiraGTx Holdings  ICON PLC

Very good diversification

The 3 months correlation between MeiraGTx and ICON is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding MeiraGTx Holdings PLC and ICON PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PLC and MeiraGTx Holdings 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 MeiraGTx Holdings PLC are associated (or correlated) with ICON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PLC has no effect on the direction of MeiraGTx Holdings i.e., MeiraGTx Holdings and ICON PLC go up and down completely randomly.

Pair Corralation between MeiraGTx Holdings and ICON PLC

Given the investment horizon of 90 days MeiraGTx Holdings is expected to generate 1.47 times less return on investment than ICON PLC. In addition to that, MeiraGTx Holdings is 2.54 times more volatile than ICON PLC. It trades about 0.02 of its total potential returns per unit of risk. ICON PLC is currently generating about 0.09 per unit of volatility. If you would invest  20,647  in ICON PLC on January 17, 2024 and sell it today you would earn a total of  9,265  from holding ICON PLC or generate 44.87% return on investment over 90 days.

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

MeiraGTx Holdings PLC  vs.  ICON PLC

MeiraGTx Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MeiraGTx Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ICON PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICON PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, ICON PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MeiraGTx Holdings and ICON PLC

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

The idea behind MeiraGTx Holdings PLC and ICON PLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.