Correlation Between Catalent and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Catalent and Teva Pharmaceutical 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 Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Catalent and Teva Pharmaceutical 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 Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Teva Pharmaceutical.
Diversification Opportunities for Catalent and Teva Pharmaceutical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Catalent and Teva is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Catalent i.e., Catalent and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Catalent and Teva Pharmaceutical
Assuming the 90 days horizon Catalent is expected to generate 1.97 times less return on investment than Teva Pharmaceutical. In addition to that, Catalent is 1.11 times more volatile than Teva Pharmaceutical Industries. It trades about 0.03 of its total potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about 0.07 per unit of volatility. If you would invest 934.00 in Teva Pharmaceutical Industries on October 15, 2024 and sell it today you would earn a total of 1,096 from holding Teva Pharmaceutical Industries or generate 117.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.6% |
| Values | Daily Returns |
Catalent vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Catalent |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Teva Pharmaceutical |
Catalent and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Teva Pharmaceutical
The main advantage of trading using opposite Catalent and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Catalent vs. BURLINGTON STORES | Catalent vs. Ebro Foods SA | Catalent vs. RETAIL FOOD GROUP | Catalent vs. BJs Wholesale Club |
| Teva Pharmaceutical vs. GWILLI FOOD | Teva Pharmaceutical vs. United Natural Foods | Teva Pharmaceutical vs. Tyson Foods | Teva Pharmaceutical vs. MTY Food Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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