Correlation Between West Pharmaceutical and Carl Zeiss
Can any of the company-specific risk be diversified away by investing in both West Pharmaceutical and Carl Zeiss 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 West Pharmaceutical and Carl Zeiss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West Pharmaceutical Services and Carl Zeiss Meditec, you can compare the effects of market volatilities on West Pharmaceutical and Carl Zeiss 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 West Pharmaceutical with a short position of Carl Zeiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Pharmaceutical and Carl Zeiss.
Diversification Opportunities for West Pharmaceutical and Carl Zeiss
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between West and Carl is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding West Pharmaceutical Services and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and West Pharmaceutical 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 West Pharmaceutical Services are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of West Pharmaceutical i.e., West Pharmaceutical and Carl Zeiss go up and down completely randomly.
Pair Corralation between West Pharmaceutical and Carl Zeiss
Considering the 90-day investment horizon West Pharmaceutical Services is expected to generate 0.85 times more return on investment than Carl Zeiss. However, West Pharmaceutical Services is 1.18 times less risky than Carl Zeiss. It trades about 0.03 of its potential returns per unit of risk. Carl Zeiss Meditec is currently generating about -0.05 per unit of risk. If you would invest 27,222 in West Pharmaceutical Services on November 2, 2024 and sell it today you would earn a total of 6,924 from holding West Pharmaceutical Services or generate 25.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
West Pharmaceutical Services vs. Carl Zeiss Meditec
Performance |
| Timeline |
| West Pharmaceutical |
| Carl Zeiss Meditec |
West Pharmaceutical and Carl Zeiss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West Pharmaceutical and Carl Zeiss
The main advantage of trading using opposite West Pharmaceutical and Carl Zeiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West Pharmaceutical position performs unexpectedly, Carl Zeiss 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 Carl Zeiss will offset losses from the drop in Carl Zeiss' long position.| West Pharmaceutical vs. Teleflex Incorporated | West Pharmaceutical vs. Alcon AG | West Pharmaceutical vs. ResMed Inc | West Pharmaceutical vs. ICU Medical |
| Carl Zeiss vs. Coloplast A | Carl Zeiss vs. EssilorLuxottica Socit anonyme | Carl Zeiss vs. Carl Zeiss Meditec | Carl Zeiss vs. Hoya Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |