Correlation Between United States and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Eli Lilly and, you can compare the effects of market volatilities on United States 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 United States with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Eli Lilly.
Diversification Opportunities for United States and Eli Lilly
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Eli is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and United States 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 United States Steel 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 United States i.e., United States and Eli Lilly go up and down completely randomly.
Pair Corralation between United States and Eli Lilly
Given the investment horizon of 90 days United States Steel is expected to generate 1.22 times more return on investment than Eli Lilly. However, United States is 1.22 times more volatile than Eli Lilly and. It trades about 0.07 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.04 per unit of risk. If you would invest 67,536 in United States Steel on September 1, 2024 and sell it today you would earn a total of 14,874 from holding United States Steel or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
United States Steel vs. Eli Lilly and
Performance |
| Timeline |
| United States Steel |
| Eli Lilly |
United States and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Eli Lilly
The main advantage of trading using opposite United States and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Grupo Hotelero Santa | United States vs. Southwest Airlines | United States vs. Grupo Sports World | United States vs. Ameriprise Financial |
| Eli Lilly vs. Roche Holding AG | Eli Lilly vs. Amgen Inc | Eli Lilly vs. Gilead Sciences | Eli Lilly vs. Biogen 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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