Correlation Between Elanco Animal and Alimera Sciences
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and Alimera Sciences 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 Elanco Animal and Alimera Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elanco Animal Health and Alimera Sciences, you can compare the effects of market volatilities on Elanco Animal and Alimera Sciences 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 Elanco Animal with a short position of Alimera Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Alimera Sciences.
Diversification Opportunities for Elanco Animal and Alimera Sciences
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elanco and Alimera is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Alimera Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimera Sciences and Elanco Animal 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 Elanco Animal Health are associated (or correlated) with Alimera Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimera Sciences has no effect on the direction of Elanco Animal i.e., Elanco Animal and Alimera Sciences go up and down completely randomly.
Pair Corralation between Elanco Animal and Alimera Sciences
Given the investment horizon of 90 days Elanco Animal is expected to generate 252.12 times less return on investment than Alimera Sciences. But when comparing it to its historical volatility, Elanco Animal Health is 2.14 times less risky than Alimera Sciences. It trades about 0.0 of its potential returns per unit of risk. Alimera Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 365.00 in Alimera Sciences on August 28, 2024 and sell it today you would earn a total of 189.00 from holding Alimera Sciences or generate 51.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.6% |
| Values | Daily Returns |
Elanco Animal Health vs. Alimera Sciences
Performance |
| Timeline |
| Elanco Animal Health |
| Alimera Sciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elanco Animal and Alimera Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Alimera Sciences
The main advantage of trading using opposite Elanco Animal and Alimera Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, Alimera Sciences 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 Alimera Sciences will offset losses from the drop in Alimera Sciences' long position.| Elanco Animal vs. Capricor Therapeutics | Elanco Animal vs. Soleno Therapeutics | Elanco Animal vs. Bio Path Holdings | Elanco Animal vs. Moleculin Biotech |
| Alimera Sciences vs. Shuttle Pharmaceuticals | Alimera Sciences vs. Lifecore Biomedical | Alimera Sciences vs. Journey Medical Corp | Alimera Sciences vs. Organogenesis 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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