Correlation Between Caseys General and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Eli Lilly and, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Eli Lilly.
Diversification Opportunities for Caseys General and Eli Lilly
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caseys and Eli is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Eli Lilly go up and down completely randomly.
Pair Corralation between Caseys General and Eli Lilly
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.7 times more return on investment than Eli Lilly. However, Caseys General Stores is 1.43 times less risky than Eli Lilly. It trades about 0.16 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.09 per unit of risk. If you would invest 35,151 in Caseys General Stores on September 13, 2024 and sell it today you would earn a total of 4,249 from holding Caseys General Stores or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Eli Lilly and
Performance |
| Timeline |
| Caseys General Stores |
| Eli Lilly |
Caseys General and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Eli Lilly
The main advantage of trading using opposite Caseys General and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Eli Lilly vs. PICKN PAY STORES | Eli Lilly vs. JIAHUA STORES | Eli Lilly vs. National Retail Properties | Eli Lilly vs. Caseys General Stores |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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