Correlation Between Thermo Fisher and Roper Technologies

Can any of the company-specific risk be diversified away by investing in both Thermo Fisher and Roper Technologies 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 Thermo Fisher and Roper Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thermo Fisher Scientific and Roper Technologies Common, you can compare the effects of market volatilities on Thermo Fisher and Roper Technologies 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 Thermo Fisher with a short position of Roper Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and Roper Technologies.

Diversification Opportunities for Thermo Fisher and Roper Technologies

0.33

Correlation Coefficient

Thermo Fisher  Roper Technologies

Weak diversification

The 3 months correlation between Thermo and Roper is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Roper Technologies Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies Common and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies Common has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and Roper Technologies go up and down completely randomly.

Pair Corralation between Thermo Fisher and Roper Technologies

Considering the 90-day investment horizon Thermo Fisher is expected to generate 14.13 times less return on investment than Roper Technologies. In addition to that, Thermo Fisher is 1.39 times more volatile than Roper Technologies Common. It trades about 0.0 of its total potential returns per unit of risk. Roper Technologies Common is currently generating about 0.07 per unit of volatility. If you would invest  43,506  in Roper Technologies Common on January 24, 2024 and sell it today you would earn a total of  10,405  from holding Roper Technologies Common or generate 23.92% return on investment over 90 days.

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

Thermo Fisher Scientific  vs.  Roper Technologies Common

Thermo Fisher Scientific

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Roper Technologies Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Roper Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Thermo Fisher and Roper Technologies

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

The idea behind Thermo Fisher Scientific and Roper Technologies Common 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.