Correlation Between Catalent and Takeda Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Catalent and Takeda 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 Takeda Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Takeda Pharmaceutical, you can compare the effects of market volatilities on Catalent and Takeda 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 Takeda Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Takeda Pharmaceutical.
Diversification Opportunities for Catalent and Takeda Pharmaceutical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Catalent and Takeda is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda 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 Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of Catalent i.e., Catalent and Takeda Pharmaceutical go up and down completely randomly.
Pair Corralation between Catalent and Takeda Pharmaceutical
Assuming the 90 days horizon Catalent is expected to generate 0.86 times more return on investment than Takeda Pharmaceutical. However, Catalent is 1.16 times less risky than Takeda Pharmaceutical. It trades about 0.26 of its potential returns per unit of risk. Takeda Pharmaceutical is currently generating about -0.17 per unit of risk. If you would invest 5,775 in Catalent on September 26, 2024 and sell it today you would earn a total of 218.00 from holding Catalent or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Catalent vs. Takeda Pharmaceutical
Performance |
| Timeline |
| Catalent |
| Takeda Pharmaceutical |
Catalent and Takeda Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Takeda Pharmaceutical
The main advantage of trading using opposite Catalent and Takeda Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Takeda 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 Takeda Pharmaceutical will offset losses from the drop in Takeda Pharmaceutical's long position.| Catalent vs. Zoetis Inc | Catalent vs. Takeda Pharmaceutical | Catalent vs. Eisai Co | Catalent vs. Shionogi Co |
| Takeda Pharmaceutical vs. Zoetis Inc | Takeda Pharmaceutical vs. Eisai Co | Takeda Pharmaceutical vs. Shionogi Co | Takeda Pharmaceutical vs. Catalent |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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