Correlation Between Catalent and Tilray
Can any of the company-specific risk be diversified away by investing in both Catalent and Tilray 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 Tilray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalent and Tilray Inc, you can compare the effects of market volatilities on Catalent and Tilray 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 Tilray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and Tilray.
Diversification Opportunities for Catalent and Tilray
Modest diversification
The 3 months correlation between Catalent and Tilray is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc 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 Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Catalent i.e., Catalent and Tilray go up and down completely randomly.
Pair Corralation between Catalent and Tilray
Given the investment horizon of 90 days Catalent is expected to generate 0.18 times more return on investment than Tilray. However, Catalent is 5.52 times less risky than Tilray. It trades about 0.03 of its potential returns per unit of risk. Tilray Inc is currently generating about -0.26 per unit of risk. If you would invest 5,940 in Catalent on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Catalent or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalent vs. Tilray Inc
Performance |
| Timeline |
| Catalent |
| Tilray Inc |
Catalent and Tilray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalent and Tilray
The main advantage of trading using opposite Catalent and Tilray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent position performs unexpectedly, Tilray 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 Tilray will offset losses from the drop in Tilray's long position.| Catalent vs. Sunshine Biopharma | Catalent vs. Thayer Ventures Acquisition | Catalent vs. Biofrontera Warrants | Catalent vs. Neurosense Therapeutics |
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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