Correlation Between Takeda Pharmaceutical and Tilray

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

By analyzing existing cross correlation between Takeda Pharmaceutical Co and Tilray Inc, you can compare the effects of market volatilities on Takeda Pharmaceutical and Tilray 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 Takeda Pharmaceutical with a short position of Tilray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Tilray.

Diversification Opportunities for Takeda Pharmaceutical and Tilray

-0.23

Correlation Coefficient

Takeda Pharmaceutical  Tilray

Very good diversification

The 3 months correlation between Takeda and Tilray is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc and Takeda 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 Takeda Pharmaceutical Co are associated (or correlated) with Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Tilray go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Tilray

Assuming the 90 days horizon Takeda Pharmaceutical Co is expected to under-perform the Tilray. But the pink sheet apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical Co is 2.52 times less risky than Tilray. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Tilray Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Tilray Inc on January 26, 2024 and sell it today you would lose (44.00) from holding Tilray Inc or give up 19.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Takeda Pharmaceutical Co  vs.  Tilray Inc

Takeda Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Takeda Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tilray Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tilray Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Tilray may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Takeda Pharmaceutical and Tilray

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

The idea behind Takeda Pharmaceutical Co and Tilray Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.