Correlation Between Catalent and BTS Group
Can any of the company-specific risk be diversified away by investing in both Catalent and BTS Group 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 Catalent and BTS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and BTS Group Holdings, you can compare the effects of market volatilities on Catalent and BTS Group 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 Catalent with a short position of BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and BTS Group.
Diversification Opportunities for Catalent and BTS Group
Pay attention - limited upside
The 3 months correlation between Catalent and BTS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings and Catalent 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 Catalent are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of Catalent i.e., Catalent and BTS Group go up and down completely randomly.
Pair Corralation between Catalent and BTS Group
Given the investment horizon of 90 days Catalent is expected to generate 2.2 times more return on investment than BTS Group. However, Catalent is 2.2 times more volatile than BTS Group Holdings. It trades about 0.03 of its potential returns per unit of risk. BTS Group Holdings is currently generating about -0.01 per unit of risk. If you would invest 4,678 in Catalent on September 3, 2024 and sell it today you would earn a total of 1,433 from holding Catalent or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. BTS Group Holdings
Performance |
| Timeline |
| Catalent |
| BTS Group Holdings |
Catalent and BTS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and BTS Group
The main advantage of trading using opposite Catalent and BTS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, BTS Group 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 BTS Group will offset losses from the drop in BTS Group's long position.| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
| BTS Group vs. LB Foster | BTS Group vs. Norfolk Southern | BTS Group vs. Union Pacific | BTS Group vs. Canadian Pacific Railway |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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