Correlation Between Tilray and PetIQ
Can any of the company-specific risk be diversified away by investing in both Tilray and PetIQ 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 PetIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tilray Inc and PetIQ Inc, you can compare the effects of market volatilities on Tilray and PetIQ 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 PetIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and PetIQ.
Diversification Opportunities for Tilray and PetIQ
Very good diversification
The 3 months correlation between Tilray and PetIQ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc 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 PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Tilray i.e., Tilray and PetIQ go up and down completely randomly.
Pair Corralation between Tilray and PetIQ
Given the investment horizon of 90 days Tilray Inc is expected to under-perform the PetIQ. In addition to that, Tilray is 1.51 times more volatile than PetIQ Inc. It trades about -0.02 of its total potential returns per unit of risk. PetIQ Inc is currently generating about 0.08 per unit of volatility. If you would invest 1,151 in PetIQ Inc on August 27, 2024 and sell it today you would earn a total of 1,947 from holding PetIQ Inc or generate 169.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.77% |
| Values | Daily Returns |
Tilray Inc vs. PetIQ Inc
Performance |
| Timeline |
| Tilray Inc |
| PetIQ Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Tilray and PetIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tilray and PetIQ
The main advantage of trading using opposite Tilray and PetIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray position performs unexpectedly, PetIQ 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 PetIQ will offset losses from the drop in PetIQ's long position.The idea behind Tilray Inc and PetIQ Inc 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.| PetIQ vs. Prestige Brand Holdings | PetIQ vs. Collegium Pharmaceutical | PetIQ vs. Regencell Bioscience Holdings | PetIQ vs. Pacira BioSciences, |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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