Correlation Between Teva Pharma and Catalent
Can any of the company-specific risk be diversified away by investing in both Teva Pharma 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 Teva Pharma and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharma Industries and Catalent, you can compare the effects of market volatilities on Teva Pharma 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 Teva Pharma with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Catalent.
Diversification Opportunities for Teva Pharma and Catalent
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teva and Catalent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Teva Pharma 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 Pharma Industries 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 Teva Pharma i.e., Teva Pharma and Catalent go up and down completely randomly.
Pair Corralation between Teva Pharma and Catalent
Given the investment horizon of 90 days Teva Pharma Industries is expected to generate 0.73 times more return on investment than Catalent. However, Teva Pharma Industries is 1.37 times less risky than Catalent. It trades about 0.07 of its potential returns per unit of risk. Catalent is currently generating about 0.03 per unit of risk. If you would invest 855.00 in Teva Pharma Industries on August 27, 2024 and sell it today you would earn a total of 857.00 from holding Teva Pharma Industries or generate 100.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharma Industries vs. Catalent
Performance |
| Timeline |
| Teva Pharma Industries |
| Catalent |
Teva Pharma and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and Catalent
The main advantage of trading using opposite Teva Pharma and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma 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.| Teva Pharma vs. Haleon plc | Teva Pharma vs. Bausch Health Companies | Teva Pharma vs. Zoetis Inc | Teva Pharma vs. Takeda Pharmaceutical Co |
| Catalent vs. IQVIA Holdings | Catalent vs. West Pharmaceutical Services | Catalent vs. Charles River Laboratories | Catalent vs. Bio Rad Laboratories |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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