Correlation Between Teva Pharmaceutical and Nice
Can any of the company-specific risk be diversified away by investing in both Teva Pharmaceutical and Nice 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 Teva Pharmaceutical and Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharmaceutical Industries and Nice, you can compare the effects of market volatilities on Teva Pharmaceutical and Nice 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 Teva Pharmaceutical with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Nice.
Diversification Opportunities for Teva Pharmaceutical and Nice
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Teva and Nice is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Teva Pharmaceutical 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 Teva Pharmaceutical Industries are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Teva Pharmaceutical i.e., Teva Pharmaceutical and Nice go up and down completely randomly.
Pair Corralation between Teva Pharmaceutical and Nice
Assuming the 90 days trading horizon Teva Pharmaceutical Industries is expected to under-perform the Nice. But the stock apears to be less risky and, when comparing its historical volatility, Teva Pharmaceutical Industries is 2.57 times less risky than Nice. The stock trades about -0.25 of its potential returns per unit of risk. The Nice is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,700,000 in Nice on August 24, 2024 and sell it today you would lose (325,000) from holding Nice or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharmaceutical Industries vs. Nice
Performance |
| Timeline |
| Teva Pharmaceutical |
| Nice |
Teva Pharmaceutical and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharmaceutical and Nice
The main advantage of trading using opposite Teva Pharmaceutical and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharmaceutical position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.| Teva Pharmaceutical vs. Bezeq Israeli Telecommunication | Teva Pharmaceutical vs. El Al Israel | Teva Pharmaceutical vs. Bank Leumi Le Israel | Teva Pharmaceutical vs. Elbit Systems |
| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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