Correlation Between West Pharmaceutical and NexGel Warrant
Can any of the company-specific risk be diversified away by investing in both West Pharmaceutical and NexGel Warrant 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 NexGel Warrant 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 NexGel Warrant, you can compare the effects of market volatilities on West Pharmaceutical and NexGel Warrant 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 NexGel Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Pharmaceutical and NexGel Warrant.
Diversification Opportunities for West Pharmaceutical and NexGel Warrant
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between West and NexGel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding West Pharmaceutical Services and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant 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 NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of West Pharmaceutical i.e., West Pharmaceutical and NexGel Warrant go up and down completely randomly.
Pair Corralation between West Pharmaceutical and NexGel Warrant
Considering the 90-day investment horizon West Pharmaceutical Services is expected to under-perform the NexGel Warrant. But the stock apears to be less risky and, when comparing its historical volatility, West Pharmaceutical Services is 5.13 times less risky than NexGel Warrant. The stock trades about -0.04 of its potential returns per unit of risk. The NexGel Warrant is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 65.00 in NexGel Warrant on September 12, 2024 and sell it today you would lose (1.00) from holding NexGel Warrant or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
West Pharmaceutical Services vs. NexGel Warrant
Performance |
| Timeline |
| West Pharmaceutical |
| NexGel Warrant |
West Pharmaceutical and NexGel Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West Pharmaceutical and NexGel Warrant
The main advantage of trading using opposite West Pharmaceutical and NexGel Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West Pharmaceutical position performs unexpectedly, NexGel Warrant 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 NexGel Warrant will offset losses from the drop in NexGel Warrant's long position.| West Pharmaceutical vs. Teleflex Incorporated | West Pharmaceutical vs. Alcon AG | West Pharmaceutical vs. ResMed Inc | West Pharmaceutical vs. ICU Medical |
| NexGel Warrant vs. West Pharmaceutical Services | NexGel Warrant vs. ResMed Inc | NexGel Warrant vs. ICU Medical | NexGel Warrant vs. The Cooper Companies, |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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