Correlation Between Bio Rad and Catalent
Can any of the company-specific risk be diversified away by investing in both Bio Rad and Catalent 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 Bio Rad and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Rad Laboratories and Catalent, you can compare the effects of market volatilities on Bio Rad and Catalent 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 Bio Rad with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Rad and Catalent.
Diversification Opportunities for Bio Rad and Catalent
Good diversification
The 3 months correlation between Bio and Catalent is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bio Rad Laboratories and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Bio Rad 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 Bio Rad Laboratories are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Bio Rad i.e., Bio Rad and Catalent go up and down completely randomly.
Pair Corralation between Bio Rad and Catalent
Considering the 90-day investment horizon Bio Rad Laboratories is expected to under-perform the Catalent. In addition to that, Bio Rad is 4.17 times more volatile than Catalent. It trades about -0.05 of its total potential returns per unit of risk. Catalent is currently generating about -0.02 per unit of volatility. If you would invest 5,992 in Catalent on August 23, 2024 and sell it today you would lose (26.00) from holding Catalent or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Rad Laboratories vs. Catalent
Performance |
| Timeline |
| Bio Rad Laboratories |
| Catalent |
Bio Rad and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Rad and Catalent
The main advantage of trading using opposite Bio Rad and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Rad position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.| Bio Rad vs. Tandem Diabetes Care | Bio Rad vs. DexCom Inc | Bio Rad vs. Inspire Medical Systems | Bio Rad vs. Penumbra |
| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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