Correlation Between Catalent and Ipsen SA
Can any of the company-specific risk be diversified away by investing in both Catalent and Ipsen SA 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 Catalent and Ipsen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Ipsen SA, you can compare the effects of market volatilities on Catalent and Ipsen SA 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 Catalent with a short position of Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Ipsen SA.
Diversification Opportunities for Catalent and Ipsen SA
Excellent diversification
The 3 months correlation between Catalent and Ipsen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA and Catalent 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 Catalent are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of Catalent i.e., Catalent and Ipsen SA go up and down completely randomly.
Pair Corralation between Catalent and Ipsen SA
Assuming the 90 days horizon Catalent is expected to generate 0.54 times more return on investment than Ipsen SA. However, Catalent is 1.86 times less risky than Ipsen SA. It trades about 0.14 of its potential returns per unit of risk. Ipsen SA is currently generating about -0.02 per unit of risk. If you would invest 5,240 in Catalent on September 26, 2024 and sell it today you would earn a total of 753.00 from holding Catalent or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Catalent vs. Ipsen SA
Performance |
| Timeline |
| Catalent |
| Ipsen SA |
Catalent and Ipsen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Ipsen SA
The main advantage of trading using opposite Catalent and Ipsen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Ipsen SA 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 Ipsen SA will offset losses from the drop in Ipsen SA's long position.| Catalent vs. Zoetis Inc | Catalent vs. Takeda Pharmaceutical | Catalent vs. Eisai Co | Catalent vs. Teva Pharmaceutical Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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