Correlation Between Nutranomics and Teva Pharma

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

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

Diversification Opportunities for Nutranomics and Teva Pharma

0.08

Correlation Coefficient

Nutranomics  Teva Pharma

Significant diversification

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

Pair Corralation between Nutranomics and Teva Pharma

If you would invest  1,760  in Teva Pharma Industries on October 8, 2024 and sell it today you would earn a total of  364.00  from holding Teva Pharma Industries or generate 20.68% return on investment over 90 days.

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

Nutranomics  vs.  Teva Pharma Industries

Nutranomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nutranomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nutranomics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Teva Pharma Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teva Pharma Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Teva Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nutranomics and Teva Pharma

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

The idea behind Nutranomics and Teva Pharma Industries 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.