Correlation Between Eagle Pharmaceuticals and Catalent
Can any of the company-specific risk be diversified away by investing in both Eagle Pharmaceuticals and Catalent 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 Eagle Pharmaceuticals and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Pharmaceuticals and Catalent, you can compare the effects of market volatilities on Eagle Pharmaceuticals and Catalent 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 Eagle Pharmaceuticals with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Pharmaceuticals and Catalent.
Diversification Opportunities for Eagle Pharmaceuticals and Catalent
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eagle and Catalent is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and Catalent go up and down completely randomly.
Pair Corralation between Eagle Pharmaceuticals and Catalent
Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the Catalent. In addition to that, Eagle Pharmaceuticals is 1.64 times more volatile than Catalent. It trades about -0.1 of its total potential returns per unit of risk. Catalent is currently generating about 0.03 per unit of volatility. If you would invest 4,818 in Catalent on August 31, 2024 and sell it today you would earn a total of 1,293 from holding Catalent or generate 26.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.63% |
| Values | Daily Returns |
Eagle Pharmaceuticals vs. Catalent
Performance |
| Timeline |
| Eagle Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Catalent |
Eagle Pharmaceuticals and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Pharmaceuticals and Catalent
The main advantage of trading using opposite Eagle Pharmaceuticals and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Pharmaceuticals position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.| Eagle Pharmaceuticals vs. ANI Pharmaceuticals | Eagle Pharmaceuticals vs. Phibro Animal Health | Eagle Pharmaceuticals vs. Prestige Brand Holdings | Eagle Pharmaceuticals vs. Collegium Pharmaceutical |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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