Correlation Between Tilray and Eagle Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Tilray and Eagle Pharmaceuticals 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 Tilray and Eagle Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tilray Inc and Eagle Pharmaceuticals, you can compare the effects of market volatilities on Tilray and Eagle Pharmaceuticals 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 Tilray with a short position of Eagle Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and Eagle Pharmaceuticals.
Diversification Opportunities for Tilray and Eagle Pharmaceuticals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tilray and Eagle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals and Tilray 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 Tilray Inc are associated (or correlated) with Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Tilray i.e., Tilray and Eagle Pharmaceuticals go up and down completely randomly.
Pair Corralation between Tilray and Eagle Pharmaceuticals
Given the investment horizon of 90 days Tilray Inc is expected to generate 1.02 times more return on investment than Eagle Pharmaceuticals. However, Tilray is 1.02 times more volatile than Eagle Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Eagle Pharmaceuticals is currently generating about -0.1 per unit of risk. If you would invest 276.00 in Tilray Inc on August 31, 2024 and sell it today you would lose (139.00) from holding Tilray Inc or give up 50.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.82% |
| Values | Daily Returns |
Tilray Inc vs. Eagle Pharmaceuticals
Performance |
| Timeline |
| Tilray Inc |
| Eagle Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tilray and Eagle Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tilray and Eagle Pharmaceuticals
The main advantage of trading using opposite Tilray and Eagle Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray position performs unexpectedly, Eagle Pharmaceuticals 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 Eagle Pharmaceuticals will offset losses from the drop in Eagle Pharmaceuticals' long position.The idea behind Tilray Inc and Eagle Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eagle Pharmaceuticals vs. ANI Pharmaceuticals | Eagle Pharmaceuticals vs. Phibro Animal Health | Eagle Pharmaceuticals vs. Prestige Brand Holdings | Eagle Pharmaceuticals vs. Collegium Pharmaceutical |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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