Correlation Between Elanco Animal and SIGA Technologies
Can any of the company-specific risk be diversified away by investing in both Elanco Animal and SIGA Technologies 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 SIGA Technologies 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 SIGA Technologies, you can compare the effects of market volatilities on Elanco Animal and SIGA Technologies 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 SIGA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and SIGA Technologies.
Diversification Opportunities for Elanco Animal and SIGA Technologies
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elanco and SIGA is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies 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 SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of Elanco Animal i.e., Elanco Animal and SIGA Technologies go up and down completely randomly.
Pair Corralation between Elanco Animal and SIGA Technologies
Given the investment horizon of 90 days Elanco Animal Health is expected to generate 0.71 times more return on investment than SIGA Technologies. However, Elanco Animal Health is 1.42 times less risky than SIGA Technologies. It trades about 0.12 of its potential returns per unit of risk. SIGA Technologies is currently generating about 0.06 per unit of risk. If you would invest 1,251 in Elanco Animal Health on August 28, 2024 and sell it today you would earn a total of 88.00 from holding Elanco Animal Health or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elanco Animal Health vs. SIGA Technologies
Performance |
| Timeline |
| Elanco Animal Health |
| SIGA Technologies |
Elanco Animal and SIGA Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elanco Animal and SIGA Technologies
The main advantage of trading using opposite Elanco Animal and SIGA Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, SIGA Technologies 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 SIGA Technologies will offset losses from the drop in SIGA Technologies' long position.| Elanco Animal vs. Viatris | Elanco Animal vs. Catalent | Elanco Animal vs. Lantheus Holdings | Elanco Animal vs. Haleon plc |
| SIGA Technologies vs. Elanco Animal Health | SIGA Technologies vs. Esperion Therapeutics | SIGA Technologies vs. Catalent | SIGA Technologies vs. China Pharma 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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