Correlation Between Eli Lilly and Biogen
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Biogen 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 Biogen 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 Biogen Inc, you can compare the effects of market volatilities on Eli Lilly and Biogen 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 Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Biogen.
Diversification Opportunities for Eli Lilly and Biogen
Almost no diversification
The 3 months correlation between Eli and Biogen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Eli Lilly i.e., Eli Lilly and Biogen go up and down completely randomly.
Pair Corralation between Eli Lilly and Biogen
Considering the 90-day investment horizon Eli Lilly and is expected to generate 1.47 times more return on investment than Biogen. However, Eli Lilly is 1.47 times more volatile than Biogen Inc. It trades about -0.13 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.31 per unit of risk. If you would invest 93,865 in Eli Lilly and on August 29, 2024 and sell it today you would lose (14,933) from holding Eli Lilly and or give up 15.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Biogen Inc
Performance |
| Timeline |
| Eli Lilly |
| Biogen Inc |
Eli Lilly and Biogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Biogen
The main advantage of trading using opposite Eli Lilly and Biogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Biogen 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 Biogen will offset losses from the drop in Biogen's long position.| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |