Correlation Between Elanco Animal and Alx Oncology
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and Alx Oncology 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 Alx Oncology 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 Alx Oncology Holdings, you can compare the effects of market volatilities on Elanco Animal and Alx Oncology 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 Alx Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Alx Oncology.
Diversification Opportunities for Elanco Animal and Alx Oncology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elanco and Alx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Alx Oncology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alx Oncology Holdings 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 Alx Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alx Oncology Holdings has no effect on the direction of Elanco Animal i.e., Elanco Animal and Alx Oncology go up and down completely randomly.
Pair Corralation between Elanco Animal and Alx Oncology
Given the investment horizon of 90 days Elanco Animal Health is expected to generate 0.47 times more return on investment than Alx Oncology. However, Elanco Animal Health is 2.11 times less risky than Alx Oncology. It trades about 0.02 of its potential returns per unit of risk. Alx Oncology Holdings is currently generating about -0.03 per unit of risk. If you would invest 1,264 in Elanco Animal Health on September 2, 2024 and sell it today you would earn a total of 57.00 from holding Elanco Animal Health or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elanco Animal Health vs. Alx Oncology Holdings
Performance |
| Timeline |
| Elanco Animal Health |
| Alx Oncology Holdings |
Elanco Animal and Alx Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Alx Oncology
The main advantage of trading using opposite Elanco Animal and Alx Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, Alx Oncology 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 Alx Oncology will offset losses from the drop in Alx Oncology's long position.| Elanco Animal vs. Viatris | Elanco Animal vs. Catalent | Elanco Animal vs. Lantheus Holdings | Elanco Animal vs. Haleon plc |
| Alx Oncology vs. Tff Pharmaceuticals | Alx Oncology vs. Eliem Therapeutics | Alx Oncology vs. Inhibrx | Alx Oncology vs. Enliven Therapeutics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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