Correlation Between SIGA Technologies and Prestige Brand

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

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

Diversification Opportunities for SIGA Technologies and Prestige Brand

-0.14

Correlation Coefficient

SIGA Technologies  Prestige Brand

Good diversification

The 3 months correlation between SIGA and Prestige is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SIGA Technologies and Prestige Brand Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Brand Holdings and SIGA Technologies 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 SIGA Technologies are associated (or correlated) with Prestige Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Brand Holdings has no effect on the direction of SIGA Technologies i.e., SIGA Technologies and Prestige Brand go up and down completely randomly.

Pair Corralation between SIGA Technologies and Prestige Brand

Given the investment horizon of 90 days SIGA Technologies is expected to under-perform the Prestige Brand. In addition to that, SIGA Technologies is 3.15 times more volatile than Prestige Brand Holdings. It trades about 0.0 of its total potential returns per unit of risk. Prestige Brand Holdings is currently generating about 0.18 per unit of volatility. If you would invest  7,409  in Prestige Brand Holdings on September 3, 2024 and sell it today you would earn a total of  1,090  from holding Prestige Brand Holdings or generate 14.71% return on investment over 90 days.

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

SIGA Technologies  vs.  Prestige Brand Holdings

SIGA Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIGA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, SIGA Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Prestige Brand Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Brand Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Prestige Brand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIGA Technologies and Prestige Brand

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

The idea behind SIGA Technologies and Prestige Brand Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.