Correlation Between Biogen and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Biogen and Eli Lilly 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 Biogen and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Eli Lilly and, you can compare the effects of market volatilities on Biogen and Eli Lilly 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 Biogen with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Eli Lilly.
Diversification Opportunities for Biogen and Eli Lilly
Almost no diversification
The 3 months correlation between Biogen and Eli is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Biogen 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 Biogen Inc are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Biogen i.e., Biogen and Eli Lilly go up and down completely randomly.
Pair Corralation between Biogen and Eli Lilly
Given the investment horizon of 90 days Biogen Inc is expected to under-perform the Eli Lilly. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 1.32 times less risky than Eli Lilly. The stock trades about -0.16 of its potential returns per unit of risk. The Eli Lilly and is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 80,540 in Eli Lilly and on August 25, 2024 and sell it today you would lose (5,739) from holding Eli Lilly and or give up 7.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Eli Lilly and
Performance |
| Timeline |
| Biogen Inc |
| Eli Lilly |
Biogen and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Eli Lilly
The main advantage of trading using opposite Biogen and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
| Eli Lilly vs. Capricor Therapeutics | Eli Lilly vs. Akari Therapeutics PLC | Eli Lilly vs. Soleno Therapeutics | Eli Lilly vs. Bio Path Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |