Correlation Between International Biotechnology and Endo International

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

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

Diversification Opportunities for International Biotechnology and Endo International

-0.45

Correlation Coefficient

International Biotechnology  Endo International

Very good diversification

The 3 months correlation between International and Endo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding International Biotechnology Tr and Endo International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endo International PLC and International Biotechnology 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 International Biotechnology Trust are associated (or correlated) with Endo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endo International PLC has no effect on the direction of International Biotechnology i.e., International Biotechnology and Endo International go up and down completely randomly.

Pair Corralation between International Biotechnology and Endo International

Assuming the 90 days trading horizon International Biotechnology Trust is expected to under-perform the Endo International. In addition to that, International Biotechnology is 1.03 times more volatile than Endo International PLC. It trades about -0.05 of its total potential returns per unit of risk. Endo International PLC is currently generating about 0.25 per unit of volatility. If you would invest  60,826  in Endo International PLC on December 25, 2024 and sell it today you would earn a total of  10,413  from holding Endo International PLC or generate 17.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

International Biotechnology Tr  vs.  Endo International PLC

International Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Biotechnology Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, International Biotechnology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Endo International PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Endo International PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Endo International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Biotechnology and Endo International

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

The idea behind International Biotechnology Trust and Endo International PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.