Correlation Between Cooper Companies, and West Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Cooper Companies, and West 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 Cooper Companies, and West Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Cooper Companies, and West Pharmaceutical Services, you can compare the effects of market volatilities on Cooper Companies, and West 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 Cooper Companies, with a short position of West Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Companies, and West Pharmaceutical.
Diversification Opportunities for Cooper Companies, and West Pharmaceutical
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cooper and West is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Cooper Companies, and West Pharmaceutical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Pharmaceutical and Cooper Companies, 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 The Cooper Companies, are associated (or correlated) with West Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Pharmaceutical has no effect on the direction of Cooper Companies, i.e., Cooper Companies, and West Pharmaceutical go up and down completely randomly.
Pair Corralation between Cooper Companies, and West Pharmaceutical
Considering the 90-day investment horizon The Cooper Companies, is expected to under-perform the West Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, The Cooper Companies, is 2.91 times less risky than West Pharmaceutical. The stock trades about -0.15 of its potential returns per unit of risk. The West Pharmaceutical Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 31,021 in West Pharmaceutical Services on August 27, 2024 and sell it today you would earn a total of 638.00 from holding West Pharmaceutical Services or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Cooper Companies, vs. West Pharmaceutical Services
Performance |
| Timeline |
| Cooper Companies, |
| West Pharmaceutical |
Cooper Companies, and West Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Companies, and West Pharmaceutical
The main advantage of trading using opposite Cooper Companies, and West Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Companies, position performs unexpectedly, West 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 West Pharmaceutical will offset losses from the drop in West Pharmaceutical's long position.| Cooper Companies, vs. West Pharmaceutical Services | Cooper Companies, vs. Hologic | Cooper Companies, vs. ICU Medical | Cooper Companies, vs. Haemonetics |
| West Pharmaceutical vs. Teleflex Incorporated | West Pharmaceutical vs. Alcon AG | West Pharmaceutical vs. ResMed Inc | West Pharmaceutical vs. ICU Medical |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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