Correlation Between Prestige Brand and Phibro Animal

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

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

Diversification Opportunities for Prestige Brand and Phibro Animal

-0.66

Correlation Coefficient

Prestige Brand  Phibro Animal

Excellent diversification

The 3 months correlation between Prestige and Phibro is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Brand Holdings and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and Prestige Brand 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 Prestige Brand Holdings are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Prestige Brand i.e., Prestige Brand and Phibro Animal go up and down completely randomly.

Pair Corralation between Prestige Brand and Phibro Animal

Considering the 90-day investment horizon Prestige Brand Holdings is expected to under-perform the Phibro Animal. But the stock apears to be less risky and, when comparing its historical volatility, Prestige Brand Holdings is 2.14 times less risky than Phibro Animal. The stock trades about -0.1 of its potential returns per unit of risk. The Phibro Animal Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,929  in Phibro Animal Health on May 7, 2025 and sell it today you would earn a total of  785.00  from holding Phibro Animal Health or generate 40.69% return on investment over 90 days.

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

Prestige Brand Holdings  vs.  Phibro Animal Health

Prestige Brand Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prestige Brand Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Phibro Animal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Phibro Animal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prestige Brand and Phibro Animal

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

The idea behind Prestige Brand Holdings and Phibro Animal Health 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.