Correlation Between Elanco Animal and Evolus
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and Evolus 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 Evolus 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 Evolus Inc, you can compare the effects of market volatilities on Elanco Animal and Evolus 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 Evolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Evolus.
Diversification Opportunities for Elanco Animal and Evolus
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elanco and Evolus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc 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 Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of Elanco Animal i.e., Elanco Animal and Evolus go up and down completely randomly.
Pair Corralation between Elanco Animal and Evolus
Given the investment horizon of 90 days Elanco Animal Health is expected to generate 0.91 times more return on investment than Evolus. However, Elanco Animal Health is 1.1 times less risky than Evolus. It trades about -0.22 of its potential returns per unit of risk. Evolus Inc is currently generating about -0.24 per unit of risk. If you would invest 1,344 in Elanco Animal Health on September 21, 2024 and sell it today you would lose (162.00) from holding Elanco Animal Health or give up 12.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elanco Animal Health vs. Evolus Inc
Performance |
| Timeline |
| Elanco Animal Health |
| Evolus Inc |
Elanco Animal and Evolus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Evolus
The main advantage of trading using opposite Elanco Animal and Evolus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, Evolus 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 Evolus will offset losses from the drop in Evolus' long position.| Elanco Animal vs. Emergent Biosolutions | Elanco Animal vs. Neurocrine Biosciences | Elanco Animal vs. Teva Pharma Industries | Elanco Animal vs. Haleon plc |
| Evolus vs. Collegium Pharmaceutical | Evolus vs. Phibro Animal Health | Evolus vs. ANI Pharmaceuticals | Evolus vs. Procaps Group SA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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