Correlation Between Collegium Pharmaceutical and Evolus
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Evolus 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 Evolus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Evolus Inc, you can compare the effects of market volatilities on Collegium Pharmaceutical and Evolus 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 Evolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Evolus.
Diversification Opportunities for Collegium Pharmaceutical and Evolus
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Collegium and Evolus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc 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 Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Evolus go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Evolus
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Evolus. But the stock apears to be less risky and, when comparing its historical volatility, Collegium Pharmaceutical is 1.1 times less risky than Evolus. The stock trades about -0.03 of its potential returns per unit of risk. The Evolus Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,483 in Evolus Inc on August 27, 2024 and sell it today you would lose (223.00) from holding Evolus Inc or give up 15.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Evolus Inc
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Evolus Inc |
Collegium Pharmaceutical and Evolus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Evolus
The main advantage of trading using opposite Collegium Pharmaceutical and Evolus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, Evolus 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 Evolus will offset losses from the drop in Evolus' long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
| Evolus vs. Collegium Pharmaceutical | Evolus vs. Phibro Animal Health | Evolus vs. ANI Pharmaceuticals | Evolus vs. Procaps Group SA |
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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