Correlation Between Catalent and Joint Corp

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

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

Diversification Opportunities for Catalent and Joint Corp

0.02

Correlation Coefficient

Catalent  Joint Corp

Significant diversification

The 3 months correlation between Catalent and Joint is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp and Catalent 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 Catalent are associated (or correlated) with Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Catalent i.e., Catalent and Joint Corp go up and down completely randomly.

Pair Corralation between Catalent and Joint Corp

Given the investment horizon of 90 days Catalent is expected to generate 0.25 times more return on investment than Joint Corp. However, Catalent is 3.97 times less risky than Joint Corp. It trades about 0.12 of its potential returns per unit of risk. The Joint Corp is currently generating about -0.02 per unit of risk. If you would invest  6,016  in Catalent on September 15, 2024 and sell it today you would earn a total of  289.00  from holding Catalent or generate 4.8% return on investment over 90 days.

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

Catalent  vs.  The Joint Corp

Catalent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 9 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Joint Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Joint Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Joint Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Catalent and Joint Corp

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

The idea behind Catalent and The Joint Corp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.