Correlation Between Elanco Animal and SIVERS SEMICONDUCTORS

Can any of the company-specific risk be diversified away by investing in both Elanco Animal and SIVERS SEMICONDUCTORS 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 Elanco Animal and SIVERS SEMICONDUCTORS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elanco Animal Health and SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on Elanco Animal and SIVERS SEMICONDUCTORS 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 Elanco Animal with a short position of SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and SIVERS SEMICONDUCTORS.

Diversification Opportunities for Elanco Animal and SIVERS SEMICONDUCTORS

-0.5

Correlation Coefficient

Elanco Animal  SIVERS SEMICONDUCTORS

Very good diversification

The 3 months correlation between Elanco and SIVERS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS and Elanco Animal 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 Elanco Animal Health are associated (or correlated) with SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of Elanco Animal i.e., Elanco Animal and SIVERS SEMICONDUCTORS go up and down completely randomly.

Pair Corralation between Elanco Animal and SIVERS SEMICONDUCTORS

Assuming the 90 days horizon Elanco Animal Health is expected to generate 0.55 times more return on investment than SIVERS SEMICONDUCTORS. However, Elanco Animal Health is 1.81 times less risky than SIVERS SEMICONDUCTORS. It trades about 0.01 of its potential returns per unit of risk. SIVERS SEMICONDUCTORS AB is currently generating about 0.0 per unit of risk. If you would invest  1,263  in Elanco Animal Health on October 23, 2024 and sell it today you would lose (106.00) from holding Elanco Animal Health or give up 8.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Elanco Animal Health  vs.  SIVERS SEMICONDUCTORS AB

Elanco Animal Health

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Elanco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Elanco Animal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SIVERS SEMICONDUCTORS

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIVERS SEMICONDUCTORS AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SIVERS SEMICONDUCTORS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elanco Animal and SIVERS SEMICONDUCTORS

The main advantage of trading using opposite Elanco Animal and SIVERS SEMICONDUCTORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elanco Animal position performs unexpectedly, SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS will offset losses from the drop in SIVERS SEMICONDUCTORS's long position.

The idea behind Elanco Animal Health and SIVERS SEMICONDUCTORS AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.