Correlation Between Eli Lilly and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Gilead Sciences 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 Gilead Sciences 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 Gilead Sciences, you can compare the effects of market volatilities on Eli Lilly and Gilead Sciences 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 Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Gilead Sciences.
Diversification Opportunities for Eli Lilly and Gilead Sciences
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Eli and Gilead is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences 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 Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Eli Lilly i.e., Eli Lilly and Gilead Sciences go up and down completely randomly.
Pair Corralation between Eli Lilly and Gilead Sciences
Considering the 90-day investment horizon Eli Lilly and is expected to under-perform the Gilead Sciences. In addition to that, Eli Lilly is 1.29 times more volatile than Gilead Sciences. It trades about -0.02 of its total potential returns per unit of risk. Gilead Sciences is currently generating about 0.19 per unit of volatility. If you would invest 6,258 in Gilead Sciences on August 25, 2024 and sell it today you would earn a total of 2,761 from holding Gilead Sciences or generate 44.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eli Lilly and vs. Gilead Sciences
Performance |
| Timeline |
| Eli Lilly |
| Gilead Sciences |
Eli Lilly and Gilead Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eli Lilly and Gilead Sciences
The main advantage of trading using opposite Eli Lilly and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.| Eli Lilly vs. Capricor Therapeutics | Eli Lilly vs. Akari Therapeutics PLC | Eli Lilly vs. Soleno Therapeutics | Eli Lilly vs. Bio Path Holdings |
| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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