Correlation Between Eli Lilly and Eterna Therapeutics
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Eterna Therapeutics 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 Eterna Therapeutics 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 Eterna Therapeutics, you can compare the effects of market volatilities on Eli Lilly and Eterna Therapeutics 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 Eterna Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Eterna Therapeutics.
Diversification Opportunities for Eli Lilly and Eterna Therapeutics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eli and Eterna is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Eterna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eterna Therapeutics 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 Eterna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eterna Therapeutics has no effect on the direction of Eli Lilly i.e., Eli Lilly and Eterna Therapeutics go up and down completely randomly.
Pair Corralation between Eli Lilly and Eterna Therapeutics
Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.33 times more return on investment than Eterna Therapeutics. However, Eli Lilly and is 2.99 times less risky than Eterna Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Eterna Therapeutics is currently generating about -0.12 per unit of risk. If you would invest 56,697 in Eli Lilly and on September 19, 2024 and sell it today you would earn a total of 21,165 from holding Eli Lilly and or generate 37.33% 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. Eterna Therapeutics
Performance |
| Timeline |
| Eli Lilly |
| Eterna Therapeutics |
Eli Lilly and Eterna Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Eterna Therapeutics
The main advantage of trading using opposite Eli Lilly and Eterna Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Eterna Therapeutics 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 Eterna Therapeutics will offset losses from the drop in Eterna Therapeutics' long position.| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer Inc |
| Eterna Therapeutics vs. Arcus Biosciences | Eterna Therapeutics vs. Cullinan Oncology LLC | Eterna Therapeutics vs. Annexon | Eterna Therapeutics vs. Structure Therapeutics American |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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