Correlation Between Eton Pharmaceuticals and Elanco Animal
Can any of the company-specific risk be diversified away by investing in both Eton Pharmaceuticals and Elanco Animal 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 Eton Pharmaceuticals and Elanco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eton Pharmaceuticals and Elanco Animal Health, you can compare the effects of market volatilities on Eton Pharmaceuticals and Elanco Animal 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 Eton Pharmaceuticals with a short position of Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eton Pharmaceuticals and Elanco Animal.
Diversification Opportunities for Eton Pharmaceuticals and Elanco Animal
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eton and Elanco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health and Eton Pharmaceuticals 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 Eton Pharmaceuticals are associated (or correlated) with Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Eton Pharmaceuticals i.e., Eton Pharmaceuticals and Elanco Animal go up and down completely randomly.
Pair Corralation between Eton Pharmaceuticals and Elanco Animal
Given the investment horizon of 90 days Eton Pharmaceuticals is expected to generate 1.61 times more return on investment than Elanco Animal. However, Eton Pharmaceuticals is 1.61 times more volatile than Elanco Animal Health. It trades about 0.35 of its potential returns per unit of risk. Elanco Animal Health is currently generating about -0.07 per unit of risk. If you would invest 482.00 in Eton Pharmaceuticals on September 12, 2024 and sell it today you would earn a total of 734.50 from holding Eton Pharmaceuticals or generate 152.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eton Pharmaceuticals vs. Elanco Animal Health
Performance |
| Timeline |
| Eton Pharmaceuticals |
| Elanco Animal Health |
Eton Pharmaceuticals and Elanco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eton Pharmaceuticals and Elanco Animal
The main advantage of trading using opposite Eton Pharmaceuticals and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eton Pharmaceuticals position performs unexpectedly, Elanco Animal 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 Elanco Animal will offset losses from the drop in Elanco Animal's long position.| Eton Pharmaceuticals vs. Connect Biopharma Holdings | Eton Pharmaceuticals vs. Acumen Pharmaceuticals | Eton Pharmaceuticals vs. Nuvation Bio | Eton Pharmaceuticals vs. Eledon Pharmaceuticals |
| Elanco Animal vs. Viatris | Elanco Animal vs. Catalent | Elanco Animal vs. Lantheus Holdings | Elanco Animal vs. Haleon plc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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