Correlation Between Eli Lilly and Alsea SAB
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Alsea SAB 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 Alsea SAB 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 Alsea SAB de, you can compare the effects of market volatilities on Eli Lilly and Alsea SAB 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 Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Alsea SAB.
Diversification Opportunities for Eli Lilly and Alsea SAB
Poor diversification
The 3 months correlation between Eli and Alsea is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de 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 Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Eli Lilly i.e., Eli Lilly and Alsea SAB go up and down completely randomly.
Pair Corralation between Eli Lilly and Alsea SAB
Assuming the 90 days trading horizon Eli Lilly and is expected to under-perform the Alsea SAB. In addition to that, Eli Lilly is 2.53 times more volatile than Alsea SAB de. It trades about -0.12 of its total potential returns per unit of risk. Alsea SAB de is currently generating about -0.28 per unit of volatility. If you would invest 4,938 in Alsea SAB de on August 30, 2024 and sell it today you would lose (419.00) from holding Alsea SAB de or give up 8.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Alsea SAB de
Performance |
| Timeline |
| Eli Lilly |
| Alsea SAB de |
Eli Lilly and Alsea SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Alsea SAB
The main advantage of trading using opposite Eli Lilly and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB's long position.| Eli Lilly vs. Lloyds Banking Group | Eli Lilly vs. Grupo Carso SAB | Eli Lilly vs. GMxico Transportes SAB | Eli Lilly vs. Capital One Financial |
| Alsea SAB vs. CEMEX SAB de | Alsea SAB vs. Grupo Financiero Banorte | Alsea SAB vs. Grupo Bimbo SAB | Alsea SAB vs. Fomento Econmico Mexicano |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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