Correlation Between General Mills and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both General Mills 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 General Mills and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Eli Lilly and, you can compare the effects of market volatilities on General Mills 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 General Mills with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Eli Lilly.
Diversification Opportunities for General Mills and Eli Lilly
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Eli is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and General Mills 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 General Mills 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 General Mills i.e., General Mills and Eli Lilly go up and down completely randomly.
Pair Corralation between General Mills and Eli Lilly
If you would invest 75,979 in Eli Lilly and on September 2, 2024 and sell it today you would lose (479.00) from holding Eli Lilly and or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
General Mills vs. Eli Lilly and
Performance |
| Timeline |
| General Mills |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Eli Lilly |
General Mills and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Eli Lilly
The main advantage of trading using opposite General Mills and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills 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.| General Mills vs. SLR Investment Corp | General Mills vs. Chuangs China Investments | General Mills vs. PLAYSTUDIOS A DL 0001 | General Mills vs. Apollo Investment Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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