Correlation Between Seagen and Perrigo Company
Can any of the company-specific risk be diversified away by investing in both Seagen and Perrigo Company 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 Seagen and Perrigo Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagen Inc and Perrigo Company PLC, you can compare the effects of market volatilities on Seagen and Perrigo Company 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 Seagen with a short position of Perrigo Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagen and Perrigo Company.
Diversification Opportunities for Seagen and Perrigo Company
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seagen and Perrigo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Perrigo Company PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perrigo Company and Seagen 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 Seagen Inc are associated (or correlated) with Perrigo Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perrigo Company has no effect on the direction of Seagen i.e., Seagen and Perrigo Company go up and down completely randomly.
Pair Corralation between Seagen and Perrigo Company
Given the investment horizon of 90 days Seagen Inc is expected to generate 0.36 times more return on investment than Perrigo Company. However, Seagen Inc is 2.81 times less risky than Perrigo Company. It trades about 0.19 of its potential returns per unit of risk. Perrigo Company PLC is currently generating about 0.0 per unit of risk. If you would invest 19,387 in Seagen Inc on January 24, 2024 and sell it today you would earn a total of 3,487 from holding Seagen Inc or generate 17.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 57.77% |
Values | Daily Returns |
Seagen Inc vs. Perrigo Company PLC
Performance |
Timeline |
Seagen Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Perrigo Company |
Seagen and Perrigo Company Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seagen and Perrigo Company
The main advantage of trading using opposite Seagen and Perrigo Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagen position performs unexpectedly, Perrigo Company 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 Perrigo Company will offset losses from the drop in Perrigo Company's long position.Seagen vs. Biomarin Pharmaceutical | Seagen vs. Alnylam Pharmaceuticals | Seagen vs. Exelixis | Seagen vs. Halozyme Therapeutics |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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