Correlation Between Catalent and FREEPORT

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

By analyzing existing cross correlation between Catalent and FREEPORT MCMORAN INC 4375, you can compare the effects of market volatilities on Catalent and FREEPORT 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 Catalent with a short position of FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalent and FREEPORT.

Diversification Opportunities for Catalent and FREEPORT

-0.44

Correlation Coefficient

Catalent  FREEPORT

Very good diversification

The 3 months correlation between Catalent and FREEPORT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and FREEPORT MCMORAN INC 4375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC and Catalent 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 Catalent are associated (or correlated) with FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of Catalent i.e., Catalent and FREEPORT go up and down completely randomly.

Pair Corralation between Catalent and FREEPORT

Given the investment horizon of 90 days Catalent is expected to generate 3.56 times more return on investment than FREEPORT. However, Catalent is 3.56 times more volatile than FREEPORT MCMORAN INC 4375. It trades about 0.04 of its potential returns per unit of risk. FREEPORT MCMORAN INC 4375 is currently generating about 0.0 per unit of risk. If you would invest  4,501  in Catalent on September 20, 2024 and sell it today you would earn a total of  1,847  from holding Catalent or generate 41.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.56%
Values	Daily Returns

Catalent  vs.  FREEPORT MCMORAN INC 4375

Catalent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalent and FREEPORT

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

The idea behind Catalent and FREEPORT MCMORAN INC 4375 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.

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 Stocks Directory module to find actively traded stocks across global markets.