Correlation Between Haw Par and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Haw Par 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 Haw Par and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haw Par and Eli Lilly and, you can compare the effects of market volatilities on Haw Par 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 Haw Par with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haw Par and Eli Lilly.
Diversification Opportunities for Haw Par and Eli Lilly
Pay attention - limited upside
The 3 months correlation between Haw and Eli is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Haw Par and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Haw Par 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 Haw Par 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 Haw Par i.e., Haw Par and Eli Lilly go up and down completely randomly.
Pair Corralation between Haw Par and Eli Lilly
Assuming the 90 days horizon Haw Par is expected to generate 7.74 times less return on investment than Eli Lilly. But when comparing it to its historical volatility, Haw Par is 10.1 times less risky than Eli Lilly. It trades about 0.09 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 59,373 in Eli Lilly and on September 14, 2024 and sell it today you would earn a total of 19,539 from holding Eli Lilly and or generate 32.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haw Par vs. Eli Lilly and
Performance |
| Timeline |
| Haw Par |
| Eli Lilly |
Haw Par and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haw Par and Eli Lilly
The main advantage of trading using opposite Haw Par and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haw Par 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.| Haw Par vs. Sanofi ADR | Haw Par vs. AstraZeneca PLC ADR | Haw Par vs. Roche Holding Ltd | Haw Par vs. GlaxoSmithKline PLC ADR |
| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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