Correlation Between Eli Lilly and General Mills
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and General Mills 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 Eli Lilly and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eli Lilly and and General Mills, you can compare the effects of market volatilities on Eli Lilly and General Mills 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 Eli Lilly with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and General Mills.
Diversification Opportunities for Eli Lilly and General Mills
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eli and General is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Eli Lilly 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 Eli Lilly and are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Eli Lilly i.e., Eli Lilly and General Mills go up and down completely randomly.
Pair Corralation between Eli Lilly and General Mills
Assuming the 90 days horizon Eli Lilly and is expected to generate 1.36 times more return on investment than General Mills. However, Eli Lilly is 1.36 times more volatile than General Mills. It trades about 0.1 of its potential returns per unit of risk. General Mills is currently generating about 0.03 per unit of risk. If you would invest 31,297 in Eli Lilly and on September 1, 2024 and sell it today you would earn a total of 43,843 from holding Eli Lilly and or generate 140.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. General Mills
Performance |
| Timeline |
| Eli Lilly |
| General Mills |
Eli Lilly and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and General Mills
The main advantage of trading using opposite Eli Lilly and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Eli Lilly vs. Broadcom | Eli Lilly vs. Perseus Mining Limited | Eli Lilly vs. Texas Roadhouse | Eli Lilly vs. Liberty Broadband |
| General Mills vs. INTER CARS SA | General Mills vs. Geely Automobile Holdings | General Mills vs. GEELY AUTOMOBILE | General Mills vs. MCEWEN MINING 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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