Correlation Between Mitsubishi Electric and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Electric and Eli Lilly 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 Mitsubishi Electric and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Electric and Eli Lilly and, you can compare the effects of market volatilities on Mitsubishi Electric and Eli Lilly 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 Mitsubishi Electric with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Electric and Eli Lilly.
Diversification Opportunities for Mitsubishi Electric and Eli Lilly
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitsubishi and Eli is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Electric and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Mitsubishi Electric 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 Mitsubishi Electric are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Mitsubishi Electric i.e., Mitsubishi Electric and Eli Lilly go up and down completely randomly.
Pair Corralation between Mitsubishi Electric and Eli Lilly
Assuming the 90 days trading horizon Mitsubishi Electric is expected to generate 2.74 times less return on investment than Eli Lilly. In addition to that, Mitsubishi Electric is 1.15 times more volatile than Eli Lilly and. It trades about 0.04 of its total potential returns per unit of risk. Eli Lilly and is currently generating about 0.11 per unit of volatility. If you would invest 29,481 in Eli Lilly and on November 28, 2024 and sell it today you would earn a total of 56,189 from holding Eli Lilly and or generate 190.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mitsubishi Electric vs. Eli Lilly and
Performance |
| Timeline |
| Mitsubishi Electric |
| Eli Lilly |
Mitsubishi Electric and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Electric and Eli Lilly
The main advantage of trading using opposite Mitsubishi Electric and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Electric position performs unexpectedly, Eli Lilly 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 Eli Lilly will offset losses from the drop in Eli Lilly's long position.| Mitsubishi Electric vs. Austevoll Seafood ASA | Mitsubishi Electric vs. SENECA FOODS A | Mitsubishi Electric vs. GWILLI FOOD | Mitsubishi Electric vs. Casio Computer CoLtd |
| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Pfizer Inc | Eli Lilly vs. AstraZeneca PLC | Eli Lilly vs. Amgen Inc |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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