Correlation Between PETCO HEALTH and PURETECH HEALTH

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

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

Diversification Opportunities for PETCO HEALTH and PURETECH HEALTH

0.17

Correlation Coefficient

PETCO HEALTH  PURETECH HEALTH

Average diversification

The 3 months correlation between PETCO and PURETECH is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding PETCO HEALTH CLA and PURETECH HEALTH PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURETECH HEALTH PLC and PETCO HEALTH 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 PETCO HEALTH CLA are associated (or correlated) with PURETECH HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURETECH HEALTH PLC has no effect on the direction of PETCO HEALTH i.e., PETCO HEALTH and PURETECH HEALTH go up and down completely randomly.

Pair Corralation between PETCO HEALTH and PURETECH HEALTH

Assuming the 90 days horizon PETCO HEALTH CLA is expected to under-perform the PURETECH HEALTH. In addition to that, PETCO HEALTH is 1.57 times more volatile than PURETECH HEALTH PLC. It trades about -0.01 of its total potential returns per unit of risk. PURETECH HEALTH PLC is currently generating about -0.01 per unit of volatility. If you would invest  242.00  in PURETECH HEALTH PLC on April 24, 2025 and sell it today you would lose (85.00) from holding PURETECH HEALTH PLC or give up 35.12% of portfolio value over 90 days.

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

PETCO HEALTH CLA  vs.  PURETECH HEALTH PLC

PETCO HEALTH CLA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PETCO HEALTH CLA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PETCO HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PURETECH HEALTH PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PURETECH HEALTH PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PURETECH HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with PETCO HEALTH and PURETECH HEALTH

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

The idea behind PETCO HEALTH CLA and PURETECH HEALTH PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.