Correlation Between Mallinckrodt Plc and Journey Medical

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

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

Diversification Opportunities for Mallinckrodt Plc and Journey Medical

0.65

Correlation Coefficient

Mallinckrodt Plc  Journey Medical

Poor diversification

The 3 months correlation between Mallinckrodt and Journey is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mallinckrodt Plc and Journey Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Medical Corp and Mallinckrodt Plc 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 Mallinckrodt Plc are associated (or correlated) with Journey Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Medical Corp has no effect on the direction of Mallinckrodt Plc i.e., Mallinckrodt Plc and Journey Medical go up and down completely randomly.

Pair Corralation between Mallinckrodt Plc and Journey Medical

If you would invest  46.00  in Mallinckrodt Plc on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Mallinckrodt Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Mallinckrodt Plc  vs.  Journey Medical Corp

Mallinckrodt Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Journey Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mallinckrodt Plc and Journey Medical

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

The idea behind Mallinckrodt Plc and Journey Medical 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.