Correlation Between Haleon Plc and PetIQ

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

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

Diversification Opportunities for Haleon Plc and PetIQ

-0.26

Correlation Coefficient

Haleon Plc  PetIQ

Very good diversification

The 3 months correlation between Haleon and PetIQ is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Haleon plc and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc and Haleon 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 Haleon plc 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 Haleon Plc i.e., Haleon Plc and PetIQ go up and down completely randomly.

Pair Corralation between Haleon Plc and PetIQ

Considering the 90-day investment horizon Haleon plc is expected to generate 0.61 times more return on investment than PetIQ. However, Haleon plc is 1.65 times less risky than PetIQ. It trades about 0.04 of its potential returns per unit of risk. PetIQ Inc is currently generating about -0.08 per unit of risk. If you would invest  813.00  in Haleon plc on January 31, 2024 and sell it today you would earn a total of  34.00  from holding Haleon plc or generate 4.18% return on investment over 90 days.

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

Haleon plc  vs.  PetIQ Inc

Haleon plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haleon plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Haleon Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Haleon Plc and PetIQ

The main advantage of trading using opposite Haleon Plc and PetIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haleon Plc 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 Haleon plc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.