Correlation Between Eli Lilly and Performance Food
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Eli Lilly and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Performance Food.
Diversification Opportunities for Eli Lilly and Performance Food
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eli and Performance is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Eli Lilly i.e., Eli Lilly and Performance Food go up and down completely randomly.
Pair Corralation between Eli Lilly and Performance Food
Assuming the 90 days trading horizon Eli Lilly and is expected to generate 1.09 times more return on investment than Performance Food. However, Eli Lilly is 1.09 times more volatile than Performance Food Group. It trades about 0.31 of its potential returns per unit of risk. Performance Food Group is currently generating about -0.23 per unit of risk. If you would invest 76,838 in Eli Lilly and on November 29, 2024 and sell it today you would earn a total of 10,422 from holding Eli Lilly and or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Performance Food Group
Performance |
| Timeline |
| Eli Lilly |
| Performance Food |
Eli Lilly and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Performance Food
The main advantage of trading using opposite Eli Lilly and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.The idea behind Eli Lilly and and Performance Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Performance Food vs. COMM HEALTH SYSTEMS | Performance Food vs. PURETECH HEALTH PLC | Performance Food vs. Cardinal Health | Performance Food vs. WT OFFSHORE |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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