Correlation Between Prestige Brand and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and Phibro Animal 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 Phibro Animal 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 Phibro Animal Health, you can compare the effects of market volatilities on Prestige Brand and Phibro Animal 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 Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and Phibro Animal.
Diversification Opportunities for Prestige Brand and Phibro Animal
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prestige and Phibro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Prestige Brand i.e., Prestige Brand and Phibro Animal go up and down completely randomly.
Pair Corralation between Prestige Brand and Phibro Animal
Considering the 90-day investment horizon Prestige Brand is expected to generate 3.36 times less return on investment than Phibro Animal. But when comparing it to its historical volatility, Prestige Brand Holdings is 2.46 times less risky than Phibro Animal. It trades about 0.08 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,265 in Phibro Animal Health on August 27, 2024 and sell it today you would earn a total of 1,109 from holding Phibro Animal Health or generate 87.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Brand Holdings vs. Phibro Animal Health
Performance |
| Timeline |
| Prestige Brand Holdings |
| Phibro Animal Health |
Prestige Brand and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Brand and Phibro Animal
The main advantage of trading using opposite Prestige Brand and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| Prestige Brand vs. Evotec SE ADR | Prestige Brand vs. Supernus Pharmaceuticals | Prestige Brand vs. Collegium Pharmaceutical | Prestige Brand vs. Regencell Bioscience Holdings |
| Phibro Animal vs. Pacira BioSciences, | Phibro Animal vs. Dr Reddys Laboratories | Phibro Animal vs. Collegium Pharmaceutical | Phibro Animal vs. ANI Pharmaceuticals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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