Correlation Between Emergent Biosolutions and PetIQ

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

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

Diversification Opportunities for Emergent Biosolutions and PetIQ

-0.18

Correlation Coefficient

Emergent Biosolutions  PetIQ

Good diversification

The 3 months correlation between Emergent and PetIQ is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc and Emergent Biosolutions 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 Emergent Biosolutions are associated (or correlated) with PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and PetIQ go up and down completely randomly.

Pair Corralation between Emergent Biosolutions and PetIQ

Considering the 90-day investment horizon Emergent Biosolutions is expected to under-perform the PetIQ. In addition to that, Emergent Biosolutions is 2.81 times more volatile than PetIQ Inc. It trades about -0.18 of its total potential returns per unit of risk. PetIQ Inc is currently generating about -0.33 per unit of volatility. If you would invest  1,849  in PetIQ Inc on January 31, 2024 and sell it today you would lose (207.00) from holding PetIQ Inc or give up 11.2% of portfolio value over 90 days.

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

Emergent Biosolutions  vs.  PetIQ Inc

Emergent Biosolutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emergent Biosolutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Emergent Biosolutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

PetIQ Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Emergent Biosolutions and PetIQ

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

The idea behind Emergent Biosolutions and PetIQ Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.