Correlation Between Teva Pharma and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both Teva Pharma and Haleon Plc 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 Haleon Plc 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 Haleon plc, you can compare the effects of market volatilities on Teva Pharma and Haleon Plc 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 Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Haleon Plc.
Diversification Opportunities for Teva Pharma and Haleon Plc
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teva and Haleon is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc 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 Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Teva Pharma i.e., Teva Pharma and Haleon Plc go up and down completely randomly.
Pair Corralation between Teva Pharma and Haleon Plc
Given the investment horizon of 90 days Teva Pharma Industries is expected to generate 4.26 times more return on investment than Haleon Plc. However, Teva Pharma is 4.26 times more volatile than Haleon plc. It trades about 0.01 of its potential returns per unit of risk. Haleon plc is currently generating about -0.02 per unit of risk. If you would invest 1,845 in Teva Pharma Industries on November 1, 2024 and sell it today you would lose (61.00) from holding Teva Pharma Industries or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharma Industries vs. Haleon plc
Performance |
| Timeline |
| Teva Pharma Industries |
| Haleon plc |
Teva Pharma and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and Haleon Plc
The main advantage of trading using opposite Teva Pharma and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma position performs unexpectedly, Haleon Plc 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 Haleon Plc will offset losses from the drop in Haleon Plc'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 |
| Haleon Plc vs. Teva Pharma Industries | Haleon Plc vs. Bausch Health Companies | Haleon Plc vs. Zoetis Inc | Haleon Plc vs. Takeda Pharmaceutical Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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