Correlation Between Teva Pharma and Swedish Orphan
Can any of the company-specific risk be diversified away by investing in both Teva Pharma and Swedish Orphan 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 Teva Pharma and Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharma Industries and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Teva Pharma and Swedish Orphan 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 Teva Pharma with a short position of Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and Swedish Orphan.
Diversification Opportunities for Teva Pharma and Swedish Orphan
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teva and Swedish is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and Teva Pharma 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 Teva Pharma Industries are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Teva Pharma i.e., Teva Pharma and Swedish Orphan go up and down completely randomly.
Pair Corralation between Teva Pharma and Swedish Orphan
Given the investment horizon of 90 days Teva Pharma Industries is expected to generate 0.68 times more return on investment than Swedish Orphan. However, Teva Pharma Industries is 1.47 times less risky than Swedish Orphan. It trades about -0.22 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about -0.32 per unit of risk. If you would invest 1,406 in Teva Pharma Industries on January 25, 2024 and sell it today you would lose (105.00) from holding Teva Pharma Industries or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharma Industries vs. Swedish Orphan Biovitrum
Performance |
| Timeline |
| Teva Pharma Industries |
| Swedish Orphan Biovitrum |
Teva Pharma and Swedish Orphan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and Swedish Orphan
The main advantage of trading using opposite Teva Pharma and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.| Teva Pharma vs. Silver Spike Investment | Teva Pharma vs. Alkermes Plc | Teva Pharma vs. Eagle Pharmaceuticals | Teva Pharma vs. Evotec SE ADR |
| Swedish Orphan vs. Holloman Energy Corp | Swedish Orphan vs. cbdMD Inc | Swedish Orphan vs. Evolus Inc | Swedish Orphan vs. CV Sciences |
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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