Correlation Between Teva Pharma and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Teva Pharma and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on Teva Pharma and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Western Sierra.
Diversification Opportunities for Teva Pharma and Western Sierra
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Teva and Western is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Teva Pharma i.e., Teva Pharma and Western Sierra go up and down completely randomly.
Pair Corralation between Teva Pharma and Western Sierra
Given the investment horizon of 90 days Teva Pharma Industries is expected to under-perform the Western Sierra. In addition to that, Teva Pharma is 1.48 times more volatile than Western Sierra Mining. It trades about -0.23 of its total potential returns per unit of risk. Western Sierra Mining is currently generating about -0.21 per unit of volatility. If you would invest 0.35 in Western Sierra Mining on November 3, 2024 and sell it today you would lose (0.04) from holding Western Sierra Mining or give up 11.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Teva Pharma Industries vs. Western Sierra Mining
Performance |
| Timeline |
| Teva Pharma Industries |
| Western Sierra Mining |
Teva Pharma and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and Western Sierra
The main advantage of trading using opposite Teva Pharma and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra'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 |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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