Correlation Between US Physical and Phibro Animal
Can any of the company-specific risk be diversified away by investing in both US Physical and Phibro Animal 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 US Physical and Phibro Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Physical Therapy and Phibro Animal Health, you can compare the effects of market volatilities on US Physical and Phibro Animal 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 US Physical with a short position of Phibro Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Physical and Phibro Animal.
Diversification Opportunities for US Physical and Phibro Animal
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between UPH and Phibro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and US Physical 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 US Physical Therapy are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of US Physical i.e., US Physical and Phibro Animal go up and down completely randomly.
Pair Corralation between US Physical and Phibro Animal
Assuming the 90 days horizon US Physical is expected to generate 3.39 times less return on investment than Phibro Animal. But when comparing it to its historical volatility, US Physical Therapy is 1.09 times less risky than Phibro Animal. It trades about 0.03 of its potential returns per unit of risk. Phibro Animal Health is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,562 in Phibro Animal Health on November 7, 2024 and sell it today you would earn a total of 518.00 from holding Phibro Animal Health or generate 33.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Physical Therapy vs. Phibro Animal Health
Performance |
| Timeline |
| US Physical Therapy |
| Phibro Animal Health |
US Physical and Phibro Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Physical and Phibro Animal
The main advantage of trading using opposite US Physical and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical position performs unexpectedly, Phibro Animal 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 Phibro Animal will offset losses from the drop in Phibro Animal's long position.| US Physical vs. Take Two Interactive Software | US Physical vs. Check Point Software | US Physical vs. VITEC SOFTWARE GROUP | US Physical vs. Sekisui Chemical Co |
| Phibro Animal vs. MAANSHAN IRON H | Phibro Animal vs. Endeavour Mining PLC | Phibro Animal vs. Tianjin Capital Environmental | Phibro Animal vs. MINCO SILVER |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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