Correlation Between Henry Schein and Prestige Consumer

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

By analyzing existing cross correlation between Henry Schein and Prestige Consumer Healthcare, you can compare the effects of market volatilities on Henry Schein and Prestige Consumer 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 Henry Schein with a short position of Prestige Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henry Schein and Prestige Consumer.

Diversification Opportunities for Henry Schein and Prestige Consumer

0.76

Correlation Coefficient

Henry Schein  Prestige Consumer

Poor diversification

The 3 months correlation between Henry and Prestige is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Henry Schein and Prestige Consumer Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Consumer and Henry Schein 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 Henry Schein are associated (or correlated) with Prestige Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Consumer has no effect on the direction of Henry Schein i.e., Henry Schein and Prestige Consumer go up and down completely randomly.

Pair Corralation between Henry Schein and Prestige Consumer

Assuming the 90 days horizon Henry Schein is expected to under-perform the Prestige Consumer. In addition to that, Henry Schein is 1.25 times more volatile than Prestige Consumer Healthcare. It trades about -0.14 of its total potential returns per unit of risk. Prestige Consumer Healthcare is currently generating about -0.15 per unit of volatility. If you would invest  7,950  in Prestige Consumer Healthcare on September 23, 2024 and sell it today you would lose (400.00) from holding Prestige Consumer Healthcare or give up 5.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Henry Schein  vs.  Prestige Consumer Healthcare

Henry Schein

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Henry Schein are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Henry Schein is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Prestige Consumer

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Consumer Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Prestige Consumer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henry Schein and Prestige Consumer

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

The idea behind Henry Schein and Prestige Consumer Healthcare 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.