Correlation Between Elanco Animal and Innate Pharma
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and Innate Pharma 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 Innate Pharma 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 Innate Pharma, you can compare the effects of market volatilities on Elanco Animal and Innate Pharma 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 Innate Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and Innate Pharma.
Diversification Opportunities for Elanco Animal and Innate Pharma
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elanco and Innate is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma 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 Innate Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innate Pharma has no effect on the direction of Elanco Animal i.e., Elanco Animal and Innate Pharma go up and down completely randomly.
Pair Corralation between Elanco Animal and Innate Pharma
Given the investment horizon of 90 days Elanco Animal Health is expected to generate 0.43 times more return on investment than Innate Pharma. However, Elanco Animal Health is 2.33 times less risky than Innate Pharma. It trades about 0.08 of its potential returns per unit of risk. Innate Pharma is currently generating about -0.1 per unit of risk. If you would invest 1,264 in Elanco Animal Health on September 1, 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. Innate Pharma
Performance |
| Timeline |
| Elanco Animal Health |
| Innate Pharma |
Elanco Animal and Innate Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and Innate Pharma
The main advantage of trading using opposite Elanco Animal and Innate Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, Innate Pharma 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 Innate Pharma will offset losses from the drop in Innate Pharma's long position.| Elanco Animal vs. Crinetics Pharmaceuticals | Elanco Animal vs. Enanta Pharmaceuticals | Elanco Animal vs. Amicus Therapeutics | Elanco Animal vs. Connect Biopharma Holdings |
| Innate Pharma vs. Eliem Therapeutics | Innate Pharma vs. HCW Biologics | Innate Pharma vs. Inhibrx | Innate Pharma vs. Anebulo Pharmaceuticals |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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