Correlation Between Eli Lilly and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on Eli Lilly and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Verizon Communications.
Diversification Opportunities for Eli Lilly and Verizon Communications
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eli and Verizon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Eli Lilly i.e., Eli Lilly and Verizon Communications go up and down completely randomly.
Pair Corralation between Eli Lilly and Verizon Communications
Assuming the 90 days trading horizon Eli Lilly and is expected to under-perform the Verizon Communications. In addition to that, Eli Lilly is 1.07 times more volatile than Verizon Communications. It trades about -0.08 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.11 per unit of volatility. If you would invest 79,324 in Verizon Communications on September 2, 2024 and sell it today you would earn a total of 11,426 from holding Verizon Communications or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Eli Lilly and vs. Verizon Communications
Performance |
| Timeline |
| Eli Lilly |
| Verizon Communications |
Eli Lilly and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Verizon Communications
The main advantage of trading using opposite Eli Lilly and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| Eli Lilly vs. Roche Holding AG | Eli Lilly vs. Amgen Inc | Eli Lilly vs. Gilead Sciences | Eli Lilly vs. Biogen Inc |
| Verizon Communications vs. McEwen Mining | Verizon Communications vs. Cognizant Technology Solutions | Verizon Communications vs. First Republic Bank | Verizon Communications vs. Samsung Electronics Co |
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.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |