Correlation Between Precision BioSciences and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Precision BioSciences 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 Precision BioSciences and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision BioSciences and Eli Lilly and, you can compare the effects of market volatilities on Precision BioSciences 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 Precision BioSciences with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision BioSciences and Eli Lilly.
Diversification Opportunities for Precision BioSciences and Eli Lilly
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Precision and Eli is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Precision BioSciences 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 Precision BioSciences 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 Precision BioSciences i.e., Precision BioSciences and Eli Lilly go up and down completely randomly.
Pair Corralation between Precision BioSciences and Eli Lilly
Given the investment horizon of 90 days Precision BioSciences is expected to under-perform the Eli Lilly. In addition to that, Precision BioSciences is 2.59 times more volatile than Eli Lilly and. It trades about -0.05 of its total potential returns per unit of risk. Eli Lilly and is currently generating about 0.09 per unit of volatility. If you would invest 36,869 in Eli Lilly and on August 23, 2024 and sell it today you would earn a total of 37,721 from holding Eli Lilly and or generate 102.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision BioSciences vs. Eli Lilly and
Performance |
| Timeline |
| Precision BioSciences |
| Eli Lilly |
Precision BioSciences and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision BioSciences and Eli Lilly
The main advantage of trading using opposite Precision BioSciences and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision BioSciences 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.| Precision BioSciences vs. Kiora Pharmaceuticals | Precision BioSciences vs. ZyVersa Therapeutics | Precision BioSciences vs. Sonnet Biotherapeutics Holdings | Precision BioSciences vs. Zura Bio Limited |
| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Small Cap Core | Eli Lilly vs. Freedom Holding Corp | Eli Lilly vs. Gfl Environmental 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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