Correlation Between Eagle Pharmaceuticals and Dominari Holdings

Can any of the company-specific risk be diversified away by investing in both Eagle Pharmaceuticals and Dominari Holdings 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 Eagle Pharmaceuticals and Dominari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Pharmaceuticals and Dominari Holdings, you can compare the effects of market volatilities on Eagle Pharmaceuticals and Dominari Holdings 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 Eagle Pharmaceuticals with a short position of Dominari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Pharmaceuticals and Dominari Holdings.

Diversification Opportunities for Eagle Pharmaceuticals and Dominari Holdings

-0.42

Correlation Coefficient

Eagle Pharmaceuticals  Dominari Holdings

Very good diversification

The 3 months correlation between Eagle and Dominari is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and Dominari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominari Holdings and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with Dominari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominari Holdings has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and Dominari Holdings go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and Dominari Holdings

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the Dominari Holdings. In addition to that, Eagle Pharmaceuticals is 1.03 times more volatile than Dominari Holdings. It trades about -0.16 of its total potential returns per unit of risk. Dominari Holdings is currently generating about 0.03 per unit of volatility. If you would invest  213.00  in Dominari Holdings on February 27, 2024 and sell it today you would earn a total of  5.00  from holding Dominari Holdings or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eagle Pharmaceuticals  vs.  Dominari Holdings

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Dominari Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dominari Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, Dominari Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Eagle Pharmaceuticals and Dominari Holdings

The main advantage of trading using opposite Eagle Pharmaceuticals and Dominari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Pharmaceuticals position performs unexpectedly, Dominari Holdings 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 Dominari Holdings will offset losses from the drop in Dominari Holdings' long position.

The idea behind Eagle Pharmaceuticals and Dominari Holdings 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.