Correlation Between 4D Molecular and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both 4D Molecular and Eli Lilly 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 4D Molecular and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 4D Molecular Therapeutics and Eli Lilly and, you can compare the effects of market volatilities on 4D Molecular and Eli Lilly 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 4D Molecular with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4D Molecular and Eli Lilly.
Diversification Opportunities for 4D Molecular and Eli Lilly
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FDMT and Eli is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding 4D Molecular Therapeutics and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and 4D Molecular 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 4D Molecular Therapeutics are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of 4D Molecular i.e., 4D Molecular and Eli Lilly go up and down completely randomly.
Pair Corralation between 4D Molecular and Eli Lilly
Given the investment horizon of 90 days 4D Molecular Therapeutics is expected to under-perform the Eli Lilly. In addition to that, 4D Molecular is 2.2 times more volatile than Eli Lilly and. It trades about -0.22 of its total potential returns per unit of risk. Eli Lilly and is currently generating about -0.15 per unit of volatility. If you would invest 95,495 in Eli Lilly and on August 31, 2024 and sell it today you would lose (16,676) from holding Eli Lilly and or give up 17.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
4D Molecular Therapeutics vs. Eli Lilly and
Performance |
| Timeline |
| 4D Molecular Therapeutics |
| Eli Lilly |
4D Molecular and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4D Molecular and Eli Lilly
The main advantage of trading using opposite 4D Molecular and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4D Molecular position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.| 4D Molecular vs. Cue Biopharma | 4D Molecular vs. Tff Pharmaceuticals | 4D Molecular vs. Lantern Pharma | 4D Molecular vs. Eliem Therapeutics |
| Eli Lilly vs. Pfizer Inc | Eli Lilly vs. RLJ Lodging Trust | Eli Lilly vs. Aquagold International | Eli Lilly vs. Stepstone Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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