Correlation Between First Republic and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both First Republic 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 First Republic and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and Eli Lilly and, you can compare the effects of market volatilities on First Republic 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 First Republic with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Eli Lilly.
Diversification Opportunities for First Republic and Eli Lilly
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Eli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and First Republic 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 First Republic Bank 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 First Republic i.e., First Republic and Eli Lilly go up and down completely randomly.
Pair Corralation between First Republic and Eli Lilly
If you would invest 6,095 in First Republic Bank on August 31, 2024 and sell it today you would earn a total of 0.00 from holding First Republic Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Republic Bank vs. Eli Lilly and
Performance |
| Timeline |
| First Republic Bank |
| Eli Lilly |
First Republic and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Eli Lilly
The main advantage of trading using opposite First Republic and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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.| First Republic vs. Grupo Financiero Banorte | First Republic vs. Grupo Financiero Inbursa | First Republic vs. Banco del Bajo | First Republic vs. Fibra Mty SAPI |
| Eli Lilly vs. Grupo Sports World | Eli Lilly vs. Verizon Communications | Eli Lilly vs. Costco Wholesale | Eli Lilly vs. Ross Stores |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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