Correlation Between Eton Pharmaceuticals and Emergent Biosolutions
Can any of the company-specific risk be diversified away by investing in both Eton Pharmaceuticals and Emergent Biosolutions 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 Eton Pharmaceuticals and Emergent Biosolutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eton Pharmaceuticals and Emergent Biosolutions, you can compare the effects of market volatilities on Eton Pharmaceuticals and Emergent Biosolutions 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 Eton Pharmaceuticals with a short position of Emergent Biosolutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eton Pharmaceuticals and Emergent Biosolutions.
Diversification Opportunities for Eton Pharmaceuticals and Emergent Biosolutions
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eton and Emergent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals and Emergent Biosolutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emergent Biosolutions and Eton 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 Eton Pharmaceuticals are associated (or correlated) with Emergent Biosolutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emergent Biosolutions has no effect on the direction of Eton Pharmaceuticals i.e., Eton Pharmaceuticals and Emergent Biosolutions go up and down completely randomly.
Pair Corralation between Eton Pharmaceuticals and Emergent Biosolutions
Given the investment horizon of 90 days Eton Pharmaceuticals is expected to generate 0.52 times more return on investment than Emergent Biosolutions. However, Eton Pharmaceuticals is 1.92 times less risky than Emergent Biosolutions. It trades about 0.09 of its potential returns per unit of risk. Emergent Biosolutions is currently generating about 0.03 per unit of risk. If you would invest 299.00 in Eton Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of 975.00 from holding Eton Pharmaceuticals or generate 326.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eton Pharmaceuticals vs. Emergent Biosolutions
Performance |
| Timeline |
| Eton Pharmaceuticals |
| Emergent Biosolutions |
Eton Pharmaceuticals and Emergent Biosolutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eton Pharmaceuticals and Emergent Biosolutions
The main advantage of trading using opposite Eton Pharmaceuticals and Emergent Biosolutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eton Pharmaceuticals position performs unexpectedly, Emergent Biosolutions 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 Emergent Biosolutions will offset losses from the drop in Emergent Biosolutions' long position.| Eton Pharmaceuticals vs. Bausch Health Companies | Eton Pharmaceuticals vs. Neurocrine Biosciences | Eton Pharmaceuticals vs. Haleon plc | Eton Pharmaceuticals vs. Intracellular Th |
| Emergent Biosolutions vs. Bausch Health Companies | Emergent Biosolutions vs. Neurocrine Biosciences | Emergent Biosolutions vs. Haleon plc | Emergent Biosolutions vs. Intracellular Th |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets |