Correlation Between Prestige Brand and AmerisourceBergen
Can any of the company-specific risk be diversified away by investing in both Prestige Brand and AmerisourceBergen 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 Prestige Brand and AmerisourceBergen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Brand Holdings and AmerisourceBergen, you can compare the effects of market volatilities on Prestige Brand and AmerisourceBergen 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 Prestige Brand with a short position of AmerisourceBergen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Brand and AmerisourceBergen.
Diversification Opportunities for Prestige Brand and AmerisourceBergen
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prestige and AmerisourceBergen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen and Prestige Brand 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 Prestige Brand Holdings are associated (or correlated) with AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of Prestige Brand i.e., Prestige Brand and AmerisourceBergen go up and down completely randomly.
Pair Corralation between Prestige Brand and AmerisourceBergen
If you would invest 17,998 in AmerisourceBergen on January 20, 2024 and sell it today you would earn a total of 0.00 from holding AmerisourceBergen or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 4.55% |
Values | Daily Returns |
Prestige Brand Holdings vs. AmerisourceBergen
Performance |
Timeline |
Prestige Brand Holdings |
AmerisourceBergen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prestige Brand and AmerisourceBergen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prestige Brand and AmerisourceBergen
The main advantage of trading using opposite Prestige Brand and AmerisourceBergen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Brand position performs unexpectedly, AmerisourceBergen 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 AmerisourceBergen will offset losses from the drop in AmerisourceBergen's long position.Prestige Brand vs. Alkermes Plc | Prestige Brand vs. Ironwood Pharmaceuticals | Prestige Brand vs. Deciphera Pharmaceuticals LLC | Prestige Brand vs. Eagle Pharmaceuticals |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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