Correlation Between Madrigal Pharmaceuticals and Catalent
Can any of the company-specific risk be diversified away by investing in both Madrigal 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 Madrigal Pharmaceuticals and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madrigal Pharmaceuticals and Catalent, you can compare the effects of market volatilities on Madrigal 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 Madrigal Pharmaceuticals with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madrigal Pharmaceuticals and Catalent.
Diversification Opportunities for Madrigal Pharmaceuticals and Catalent
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Madrigal and Catalent is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Madrigal Pharmaceuticals and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Madrigal 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 Madrigal 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 Madrigal Pharmaceuticals i.e., Madrigal Pharmaceuticals and Catalent go up and down completely randomly.
Pair Corralation between Madrigal Pharmaceuticals and Catalent
Given the investment horizon of 90 days Madrigal Pharmaceuticals is expected to generate 8.21 times more return on investment than Catalent. However, Madrigal Pharmaceuticals is 8.21 times more volatile than Catalent. It trades about 0.29 of its potential returns per unit of risk. Catalent is currently generating about 0.19 per unit of risk. If you would invest 21,779 in Madrigal Pharmaceuticals on August 30, 2024 and sell it today you would earn a total of 11,366 from holding Madrigal Pharmaceuticals or generate 52.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Madrigal Pharmaceuticals vs. Catalent
Performance |
| Timeline |
| Madrigal Pharmaceuticals |
| Catalent |
Madrigal Pharmaceuticals and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madrigal Pharmaceuticals and Catalent
The main advantage of trading using opposite Madrigal Pharmaceuticals and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madrigal 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.| Madrigal Pharmaceuticals vs. TG Therapeutics | Madrigal Pharmaceuticals vs. Terns Pharmaceuticals | Madrigal Pharmaceuticals vs. Hepion Pharmaceuticals | Madrigal Pharmaceuticals vs. Viking Therapeutics |
| Catalent vs. Emergent Biosolutions | Catalent vs. Bausch Health Companies | Catalent vs. Neurocrine Biosciences | Catalent vs. Teva Pharma Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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