Correlation Between Zoetis and Silver Spike

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

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

Diversification Opportunities for Zoetis and Silver Spike

-0.8

Correlation Coefficient

Zoetis  Silver Spike

Pay attention - limited upside

The 3 months correlation between Zoetis and Silver is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zoetis Inc and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment and Zoetis 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 Zoetis Inc are associated (or correlated) with Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Zoetis i.e., Zoetis and Silver Spike go up and down completely randomly.

Pair Corralation between Zoetis and Silver Spike

Considering the 90-day investment horizon Zoetis Inc is expected to under-perform the Silver Spike. But the stock apears to be less risky and, when comparing its historical volatility, Zoetis Inc is 1.27 times less risky than Silver Spike. The stock trades about -0.08 of its potential returns per unit of risk. The Silver Spike Investment is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,114  in Silver Spike Investment on September 13, 2024 and sell it today you would earn a total of  166.00  from holding Silver Spike Investment or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Zoetis Inc  vs.  Silver Spike Investment

Zoetis Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zoetis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoetis and Silver Spike

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

The idea behind Zoetis Inc and Silver Spike Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.