Correlation Between Pacira BioSciences, and Catalent

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

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

Diversification Opportunities for Pacira BioSciences, and Catalent

-0.18

Correlation Coefficient

Pacira BioSciences,  Catalent

Good diversification

The 3 months correlation between Pacira and Catalent is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pacira BioSciences, and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Pacira BioSciences, 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 Pacira BioSciences, are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Pacira BioSciences, i.e., Pacira BioSciences, and Catalent go up and down completely randomly.

Pair Corralation between Pacira BioSciences, and Catalent

Given the investment horizon of 90 days Pacira BioSciences, is expected to generate 3.91 times more return on investment than Catalent. However, Pacira BioSciences, is 3.91 times more volatile than Catalent. It trades about 0.08 of its potential returns per unit of risk. Catalent is currently generating about 0.02 per unit of risk. If you would invest  1,518  in Pacira BioSciences, on September 2, 2024 and sell it today you would earn a total of  173.00  from holding Pacira BioSciences, or generate 11.4% return on investment over 90 days.

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

Pacira BioSciences,  vs.  Catalent

Pacira BioSciences,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacira BioSciences, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pacira BioSciences, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Catalent

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pacira BioSciences, and Catalent

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

The idea behind Pacira BioSciences, and Catalent 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.