Correlation Between Prestige Brand and Avadel Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and Avadel Pharmaceuticals 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 Prestige Brand and Avadel Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and Avadel Pharmaceuticals PLC, you can compare the effects of market volatilities on Prestige Brand and Avadel Pharmaceuticals 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 Prestige Brand with a short position of Avadel Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Avadel Pharmaceuticals.
Diversification Opportunities for Prestige Brand and Avadel Pharmaceuticals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prestige and Avadel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Avadel Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avadel Pharmaceuticals and Prestige Brand 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 Prestige Brand Holdings are associated (or correlated) with Avadel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avadel Pharmaceuticals has no effect on the direction of Prestige Brand i.e., Prestige Brand and Avadel Pharmaceuticals go up and down completely randomly.
Pair Corralation between Prestige Brand and Avadel Pharmaceuticals
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.24 times more return on investment than Avadel Pharmaceuticals. However, Prestige Brand Holdings is 4.16 times less risky than Avadel Pharmaceuticals. It trades about 0.52 of its potential returns per unit of risk. Avadel Pharmaceuticals PLC is currently generating about -0.27 per unit of risk. If you would invest 7,375 in Prestige Brand Holdings on September 1, 2024 and sell it today you would earn a total of 1,102 from holding Prestige Brand Holdings or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Avadel Pharmaceuticals PLC
Performance |
| Timeline |
| Prestige Brand Holdings |
| Avadel Pharmaceuticals |
Prestige Brand and Avadel Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Avadel Pharmaceuticals
The main advantage of trading using opposite Prestige Brand and Avadel Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, Avadel Pharmaceuticals 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 Avadel Pharmaceuticals will offset losses from the drop in Avadel Pharmaceuticals' long position.| Prestige Brand vs. Crinetics Pharmaceuticals | Prestige Brand vs. Enanta Pharmaceuticals | Prestige Brand vs. Amicus Therapeutics | Prestige Brand vs. Connect Biopharma Holdings |
| Avadel Pharmaceuticals vs. Neurocrine Biosciences | Avadel Pharmaceuticals vs. Ironwood Pharmaceuticals | Avadel Pharmaceuticals vs. Alkermes Plc | Avadel Pharmaceuticals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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