Correlation Between Collegium Pharmaceutical and Alkermes Plc
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Alkermes Plc 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 Collegium Pharmaceutical and Alkermes Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Alkermes Plc, you can compare the effects of market volatilities on Collegium Pharmaceutical and Alkermes Plc 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 Collegium Pharmaceutical with a short position of Alkermes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Alkermes Plc.
Diversification Opportunities for Collegium Pharmaceutical and Alkermes Plc
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Collegium and Alkermes is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Alkermes Plc go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Alkermes Plc
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 3.05 times more return on investment than Alkermes Plc. However, Collegium Pharmaceutical is 3.05 times more volatile than Alkermes Plc. It trades about 0.14 of its potential returns per unit of risk. Alkermes Plc is currently generating about -0.06 per unit of risk. If you would invest 3,044 in Collegium Pharmaceutical on October 20, 2024 and sell it today you would earn a total of 291.00 from holding Collegium Pharmaceutical or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Alkermes Plc
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Alkermes Plc |
Collegium Pharmaceutical and Alkermes Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Alkermes Plc
The main advantage of trading using opposite Collegium Pharmaceutical and Alkermes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, Alkermes Plc 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 Alkermes Plc will offset losses from the drop in Alkermes Plc's long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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