Correlation Between Evolus and Prestige Brand
Can any of the company-specific risk be diversified away by investing in both Evolus and Prestige Brand 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 Evolus and Prestige Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Prestige Brand Holdings, you can compare the effects of market volatilities on Evolus and Prestige Brand 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 Evolus with a short position of Prestige Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Prestige Brand.
Diversification Opportunities for Evolus and Prestige Brand
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Evolus and Prestige is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Prestige Brand Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Brand Holdings and Evolus 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 Evolus Inc are associated (or correlated) with Prestige Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Brand Holdings has no effect on the direction of Evolus i.e., Evolus and Prestige Brand go up and down completely randomly.
Pair Corralation between Evolus and Prestige Brand
Given the investment horizon of 90 days Evolus is expected to generate 3.14 times less return on investment than Prestige Brand. In addition to that, Evolus is 2.39 times more volatile than Prestige Brand Holdings. It trades about 0.02 of its total potential returns per unit of risk. Prestige Brand Holdings is currently generating about 0.18 per unit of volatility. If you would invest 6,318 in Prestige Brand Holdings on August 24, 2024 and sell it today you would earn a total of 2,096 from holding Prestige Brand Holdings or generate 33.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolus Inc vs. Prestige Brand Holdings
Performance |
| Timeline |
| Evolus Inc |
| Prestige Brand Holdings |
Evolus and Prestige Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolus and Prestige Brand
The main advantage of trading using opposite Evolus and Prestige Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus position performs unexpectedly, Prestige Brand 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 Prestige Brand will offset losses from the drop in Prestige Brand's long position.The idea behind Evolus Inc and Prestige Brand Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Prestige Brand vs. Catalent | Prestige Brand vs. Amphastar P | Prestige Brand vs. ANI Pharmaceuticals | Prestige Brand vs. Alkermes Plc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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