Correlation Between PetIQ and Milestone Pharmaceuticals

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

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

Diversification Opportunities for PetIQ and Milestone Pharmaceuticals

0.13

Correlation Coefficient

PetIQ  Milestone Pharmaceuticals

Average diversification

The 3 months correlation between PetIQ and Milestone is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PetIQ Inc and Milestone Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Milestone Pharmaceuticals and PetIQ 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 PetIQ Inc are associated (or correlated) with Milestone Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Milestone Pharmaceuticals has no effect on the direction of PetIQ i.e., PetIQ and Milestone Pharmaceuticals go up and down completely randomly.

Pair Corralation between PetIQ and Milestone Pharmaceuticals

Given the investment horizon of 90 days PetIQ is expected to generate 3.29 times less return on investment than Milestone Pharmaceuticals. But when comparing it to its historical volatility, PetIQ Inc is 17.78 times less risky than Milestone Pharmaceuticals. It trades about 0.37 of its potential returns per unit of risk. Milestone Pharmaceuticals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Milestone Pharmaceuticals on June 26, 2024 and sell it today you would earn a total of  4.00  from holding Milestone Pharmaceuticals or generate 2.67% return on investment over 90 days.

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

PetIQ Inc  vs.  Milestone Pharmaceuticals

PetIQ Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PetIQ Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, PetIQ reported solid returns over the last few months and may actually be approaching a breakup point.

Milestone Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Milestone Pharmaceuticals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Milestone Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetIQ and Milestone Pharmaceuticals

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

The idea behind PetIQ Inc and Milestone Pharmaceuticals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.