Correlation Between Eli Lilly and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and McEwen Mining 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 McEwen Mining 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 McEwen Mining, you can compare the effects of market volatilities on Eli Lilly and McEwen Mining 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 McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and McEwen Mining.
Diversification Opportunities for Eli Lilly and McEwen Mining
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eli and McEwen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining 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 McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Eli Lilly i.e., Eli Lilly and McEwen Mining go up and down completely randomly.
Pair Corralation between Eli Lilly and McEwen Mining
Assuming the 90 days trading horizon Eli Lilly is expected to generate 1.51 times less return on investment than McEwen Mining. But when comparing it to its historical volatility, Eli Lilly and is 2.61 times less risky than McEwen Mining. It trades about 0.09 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,500 in McEwen Mining on August 30, 2024 and sell it today you would earn a total of 12,300 from holding McEwen Mining or generate 164.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eli Lilly and vs. McEwen Mining
Performance |
| Timeline |
| Eli Lilly |
| McEwen Mining |
Eli Lilly and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and McEwen Mining
The main advantage of trading using opposite Eli Lilly and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, McEwen Mining 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 McEwen Mining will offset losses from the drop in McEwen Mining'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 |
| McEwen Mining vs. The Select Sector | McEwen Mining vs. SPDR Series Trust | McEwen Mining vs. FibroGen | McEwen Mining vs. iShares Trust |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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