Correlation Between Eagle Pharmaceuticals and InfuSystems Holdings

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

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

Diversification Opportunities for Eagle Pharmaceuticals and InfuSystems Holdings

0.82

Correlation Coefficient

Eagle Pharmaceuticals  InfuSystems Holdings

Very poor diversification

The 3 months correlation between Eagle and InfuSystems is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and InfuSystems Holdings

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to generate 0.93 times more return on investment than InfuSystems Holdings. However, Eagle Pharmaceuticals is 1.08 times less risky than InfuSystems Holdings. It trades about -0.04 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about -0.18 per unit of risk. If you would invest  455.00  in Eagle Pharmaceuticals on February 22, 2024 and sell it today you would lose (18.00) from holding Eagle Pharmaceuticals or give up 3.96% of portfolio value over 90 days.

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

Eagle Pharmaceuticals  vs.  InfuSystems Holdings

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

InfuSystems Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eagle Pharmaceuticals and InfuSystems Holdings

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

The idea behind Eagle Pharmaceuticals and InfuSystems 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.