Correlation Between Evotec SE and Prestige Brand
Can any of the company-specific risk be diversified away by investing in both Evotec SE 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 Evotec SE and Prestige Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evotec SE ADR and Prestige Brand Holdings, you can compare the effects of market volatilities on Evotec SE 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 Evotec SE with a short position of Prestige Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evotec SE and Prestige Brand.
Diversification Opportunities for Evotec SE and Prestige Brand
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evotec and Prestige is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Evotec SE ADR 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 Evotec SE 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 Evotec SE ADR 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 Evotec SE i.e., Evotec SE and Prestige Brand go up and down completely randomly.
Pair Corralation between Evotec SE and Prestige Brand
Considering the 90-day investment horizon Evotec SE ADR is expected to under-perform the Prestige Brand. In addition to that, Evotec SE is 2.99 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 0.06 per unit of volatility. If you would invest 6,082 in Prestige Brand Holdings on August 27, 2024 and sell it today you would earn a total of 2,403 from holding Prestige Brand Holdings or generate 39.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evotec SE ADR vs. Prestige Brand Holdings
Performance |
| Timeline |
| Evotec SE ADR |
| Prestige Brand Holdings |
Evotec SE and Prestige Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evotec SE and Prestige Brand
The main advantage of trading using opposite Evotec SE and Prestige Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evotec SE 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.| Evotec SE vs. Eliem Therapeutics | Evotec SE vs. HCW Biologics | Evotec SE vs. Scpharmaceuticals | Evotec SE vs. Milestone Pharmaceuticals |
| Prestige Brand vs. Evotec SE ADR | Prestige Brand vs. Supernus Pharmaceuticals | Prestige Brand vs. Collegium Pharmaceutical | Prestige Brand vs. Regencell Bioscience Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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