Correlation Between Eli Lilly and Cronos
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Cronos 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 Cronos 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 Cronos Group, you can compare the effects of market volatilities on Eli Lilly and Cronos 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 Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Cronos.
Diversification Opportunities for Eli Lilly and Cronos
Poor diversification
The 3 months correlation between Eli and Cronos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group 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 Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of Eli Lilly i.e., Eli Lilly and Cronos go up and down completely randomly.
Pair Corralation between Eli Lilly and Cronos
Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.59 times more return on investment than Cronos. However, Eli Lilly and is 1.68 times less risky than Cronos. It trades about 0.05 of its potential returns per unit of risk. Cronos Group is currently generating about 0.03 per unit of risk. If you would invest 64,142 in Eli Lilly and on August 28, 2024 and sell it today you would earn a total of 11,358 from holding Eli Lilly and or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Cronos Group
Performance |
| Timeline |
| Eli Lilly |
| Cronos Group |
Eli Lilly and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Cronos
The main advantage of trading using opposite Eli Lilly and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' long position.| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
| Cronos vs. OrganiGram Holdings | Cronos vs. Aurora Cannabis | Cronos vs. SNDL Inc | Cronos vs. Canopy Growth Corp |
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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