Correlation Between EuropaCorp and Biogen
Can any of the company-specific risk be diversified away by investing in both EuropaCorp and Biogen 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 EuropaCorp and Biogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuropaCorp and Biogen Inc, you can compare the effects of market volatilities on EuropaCorp and Biogen 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 EuropaCorp with a short position of Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuropaCorp and Biogen.
Diversification Opportunities for EuropaCorp and Biogen
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EuropaCorp and Biogen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding EuropaCorp and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and EuropaCorp 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 EuropaCorp are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of EuropaCorp i.e., EuropaCorp and Biogen go up and down completely randomly.
Pair Corralation between EuropaCorp and Biogen
Assuming the 90 days horizon EuropaCorp is expected to generate 3.4 times more return on investment than Biogen. However, EuropaCorp is 3.4 times more volatile than Biogen Inc. It trades about 0.19 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.08 per unit of risk. If you would invest 37.00 in EuropaCorp on November 27, 2024 and sell it today you would earn a total of 9.00 from holding EuropaCorp or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EuropaCorp vs. Biogen Inc
Performance |
| Timeline |
| EuropaCorp |
| Biogen Inc |
EuropaCorp and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuropaCorp and Biogen
The main advantage of trading using opposite EuropaCorp and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuropaCorp position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| EuropaCorp vs. Heidelberg Materials AG | EuropaCorp vs. BANKINTER ADR 2007 | EuropaCorp vs. SANOK RUBBER ZY | EuropaCorp vs. CDN IMPERIAL BANK |
| Biogen vs. UNIQA INSURANCE GR | Biogen vs. Sixt Leasing SE | Biogen vs. REVO INSURANCE SPA | Biogen vs. United Rentals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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