Correlation Between Catalent and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both Catalent and Beyond Meat 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 Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Beyond Meat, you can compare the effects of market volatilities on Catalent and Beyond Meat 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 Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Beyond Meat.
Diversification Opportunities for Catalent and Beyond Meat
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Catalent and Beyond is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Catalent i.e., Catalent and Beyond Meat go up and down completely randomly.
Pair Corralation between Catalent and Beyond Meat
Given the investment horizon of 90 days Catalent is expected to generate 0.62 times more return on investment than Beyond Meat. However, Catalent is 1.62 times less risky than Beyond Meat. It trades about 0.03 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.02 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 | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Beyond Meat
Performance |
| Timeline |
| Catalent |
| Beyond Meat |
Catalent and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Beyond Meat
The main advantage of trading using opposite Catalent and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
| Beyond Meat vs. Kraft Heinz Co | Beyond Meat vs. Hormel Foods | Beyond Meat vs. Kellanova | Beyond Meat vs. General Mills |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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