Correlation Between Entegris and Indivior PLC

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

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

Diversification Opportunities for Entegris and Indivior PLC

-0.08

Correlation Coefficient

Entegris  Indivior PLC

Good diversification

The 3 months correlation between Entegris and Indivior is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Indivior PLC Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC Ordinary and Entegris 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 Entegris are associated (or correlated) with Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC Ordinary has no effect on the direction of Entegris i.e., Entegris and Indivior PLC go up and down completely randomly.

Pair Corralation between Entegris and Indivior PLC

Given the investment horizon of 90 days Entegris is expected to generate 73.72 times less return on investment than Indivior PLC. In addition to that, Entegris is 1.04 times more volatile than Indivior PLC Ordinary. It trades about 0.0 of its total potential returns per unit of risk. Indivior PLC Ordinary is currently generating about 0.14 per unit of volatility. If you would invest  1,089  in Indivior PLC Ordinary on October 25, 2024 and sell it today you would earn a total of  119.00  from holding Indivior PLC Ordinary or generate 10.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Entegris  vs.  Indivior PLC Ordinary

Entegris

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Indivior PLC Ordinary

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indivior PLC Ordinary are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Indivior PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entegris and Indivior PLC

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

The idea behind Entegris and Indivior PLC Ordinary 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.