Correlation Between Indivior PLC and Prestige Brand

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

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

Diversification Opportunities for Indivior PLC and Prestige Brand

0.33

Correlation Coefficient

Indivior PLC  Prestige Brand

Weak diversification

The 3 months correlation between Indivior and Prestige is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Indivior PLC and Prestige Brand Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Brand Holdings and Indivior 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 Indivior PLC are associated (or correlated) with Prestige Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Brand Holdings has no effect on the direction of Indivior PLC i.e., Indivior PLC and Prestige Brand go up and down completely randomly.

Pair Corralation between Indivior PLC and Prestige Brand

If you would invest  7,125  in Prestige Brand Holdings on August 16, 2024 and sell it today you would earn a total of  1,107  from holding Prestige Brand Holdings or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Indivior PLC  vs.  Prestige Brand Holdings

Indivior PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indivior PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indivior PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Prestige Brand Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Brand Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental drivers, Prestige Brand demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indivior PLC and Prestige Brand

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

The idea behind Indivior PLC and Prestige Brand Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.