Correlation Between Perrigo Company and Prestige Brand

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

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

Diversification Opportunities for Perrigo Company and Prestige Brand

-0.42

Correlation Coefficient

Perrigo Company  Prestige Brand

Very good diversification

The 3 months correlation between Perrigo and Prestige is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Perrigo Company 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 Perrigo Company 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 Perrigo Company 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 Perrigo Company i.e., Perrigo Company and Prestige Brand go up and down completely randomly.

Pair Corralation between Perrigo Company and Prestige Brand

Given the investment horizon of 90 days Perrigo Company PLC is expected to generate 1.16 times more return on investment than Prestige Brand. However, Perrigo Company is 1.16 times more volatile than Prestige Brand Holdings. It trades about 0.09 of its potential returns per unit of risk. Prestige Brand Holdings is currently generating about -0.1 per unit of risk. If you would invest  2,442  in Perrigo Company PLC on May 6, 2025 and sell it today you would earn a total of  222.00  from holding Perrigo Company PLC or generate 9.09% return on investment over 90 days.

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

Perrigo Company PLC  vs.  Prestige Brand Holdings

Perrigo Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perrigo Company PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Perrigo Company may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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.

Pair Trading with Perrigo Company and Prestige Brand

The main advantage of trading using opposite Perrigo Company and Prestige Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perrigo Company 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 Perrigo Company 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.