Correlation Between Soleno Therapeutics and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Soleno Therapeutics 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 Soleno Therapeutics and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soleno Therapeutics and Eli Lilly and, you can compare the effects of market volatilities on Soleno Therapeutics 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 Soleno Therapeutics with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soleno Therapeutics and Eli Lilly.
Diversification Opportunities for Soleno Therapeutics and Eli Lilly
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Soleno and Eli is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly 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 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 Soleno Therapeutics i.e., Soleno Therapeutics and Eli Lilly go up and down completely randomly.
Pair Corralation between Soleno Therapeutics and Eli Lilly
Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 0.93 times more return on investment than Eli Lilly. However, Soleno Therapeutics is 1.07 times less risky than Eli Lilly. It trades about 0.1 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.19 per unit of risk. If you would invest 5,531 in Soleno Therapeutics on August 29, 2024 and sell it today you would earn a total of 303.00 from holding Soleno Therapeutics or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soleno Therapeutics vs. Eli Lilly and
Performance |
| Timeline |
| Soleno Therapeutics |
| Eli Lilly |
Soleno Therapeutics and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soleno Therapeutics and Eli Lilly
The main advantage of trading using opposite Soleno Therapeutics and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soleno Therapeutics 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.| Soleno Therapeutics vs. Annexon | Soleno Therapeutics vs. Bolt Biotherapeutics | Soleno Therapeutics vs. Lyra Therapeutics | Soleno Therapeutics vs. Pulmatrix |
| Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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