Correlation Between Elanco Animal and QUEEN S

Can any of the company-specific risk be diversified away by investing in both Elanco Animal and QUEEN S 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 QUEEN S 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 QUEEN S ROAD, you can compare the effects of market volatilities on Elanco Animal and QUEEN S 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 QUEEN S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elanco Animal and QUEEN S.

Diversification Opportunities for Elanco Animal and QUEEN S

-0.23

Correlation Coefficient

Elanco Animal  QUEEN S

Very good diversification

The 3 months correlation between Elanco and QUEEN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD 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 QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of Elanco Animal i.e., Elanco Animal and QUEEN S go up and down completely randomly.

Pair Corralation between Elanco Animal and QUEEN S

Assuming the 90 days horizon Elanco Animal Health is expected to generate 0.81 times more return on investment than QUEEN S. However, Elanco Animal Health is 1.23 times less risky than QUEEN S. It trades about -0.01 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about -0.01 per unit of risk. If you would invest  1,340  in Elanco Animal Health on October 12, 2024 and sell it today you would lose (228.00) from holding Elanco Animal Health or give up 17.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Elanco Animal Health  vs.  QUEEN S ROAD

Elanco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elanco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

QUEEN S ROAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUEEN S ROAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, QUEEN S may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Elanco Animal and QUEEN S

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

The idea behind Elanco Animal Health and QUEEN S ROAD 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.