Correlation Between Soleno Therapeutics and Elanco Animal
Can any of the company-specific risk be diversified away by investing in both Soleno Therapeutics and Elanco Animal 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 Soleno Therapeutics and Elanco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soleno Therapeutics and Elanco Animal Health, you can compare the effects of market volatilities on Soleno Therapeutics and Elanco Animal 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 Soleno Therapeutics with a short position of Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soleno Therapeutics and Elanco Animal.
Diversification Opportunities for Soleno Therapeutics and Elanco Animal
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Soleno and Elanco is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health and Soleno Therapeutics 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 Soleno Therapeutics are associated (or correlated) with Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Soleno Therapeutics i.e., Soleno Therapeutics and Elanco Animal go up and down completely randomly.
Pair Corralation between Soleno Therapeutics and Elanco Animal
Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 1.82 times less return on investment than Elanco Animal. But when comparing it to its historical volatility, Soleno Therapeutics is 1.18 times less risky than Elanco Animal. It trades about 0.07 of its potential returns per unit of risk. Elanco Animal Health is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,251 in Elanco Animal Health on August 28, 2024 and sell it today you would earn a total of 88.00 from holding Elanco Animal Health or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Soleno Therapeutics vs. Elanco Animal Health
Performance |
| Timeline |
| Soleno Therapeutics |
| Elanco Animal Health |
Soleno Therapeutics and Elanco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soleno Therapeutics and Elanco Animal
The main advantage of trading using opposite Soleno Therapeutics and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soleno Therapeutics position performs unexpectedly, Elanco Animal 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 Elanco Animal will offset losses from the drop in Elanco Animal's long position.| Soleno Therapeutics vs. Eliem Therapeutics | Soleno Therapeutics vs. HCW Biologics | Soleno Therapeutics vs. Scpharmaceuticals | Soleno Therapeutics vs. Milestone Pharmaceuticals |
| Elanco Animal vs. Capricor Therapeutics | Elanco Animal vs. Soleno Therapeutics | Elanco Animal vs. Bio Path Holdings | Elanco Animal vs. Moleculin Biotech |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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