Correlation Between Prestige Brand and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and Evotec SE 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 Evotec SE 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 Evotec SE, you can compare the effects of market volatilities on Prestige Brand and Evotec SE 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 Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Evotec SE.
Diversification Opportunities for Prestige Brand and Evotec SE
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prestige and Evotec is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Prestige Brand i.e., Prestige Brand and Evotec SE go up and down completely randomly.
Pair Corralation between Prestige Brand and Evotec SE
Considering the 90-day investment horizon Prestige Brand Holdings is expected to generate 0.41 times more return on investment than Evotec SE. However, Prestige Brand Holdings is 2.42 times less risky than Evotec SE. It trades about 0.08 of its potential returns per unit of risk. Evotec SE is currently generating about -0.09 per unit of risk. If you would invest 5,748 in Prestige Brand Holdings on September 2, 2024 and sell it today you would earn a total of 2,729 from holding Prestige Brand Holdings or generate 47.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Evotec SE
Performance |
| Timeline |
| Prestige Brand Holdings |
| Evotec SE |
Prestige Brand and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Evotec SE
The main advantage of trading using opposite Prestige Brand and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.| Prestige Brand vs. Crinetics Pharmaceuticals | Prestige Brand vs. Enanta Pharmaceuticals | Prestige Brand vs. Amicus Therapeutics | Prestige Brand vs. Connect Biopharma Holdings |
| Evotec SE vs. Pacira BioSciences, | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Phibro Animal Health |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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