Correlation Between Amexdrug and Elanco Animal

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

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

Diversification Opportunities for Amexdrug and Elanco Animal

0.0

Correlation Coefficient

Amexdrug  Elanco Animal

Pay attention - limited upside

The 3 months correlation between Amexdrug and Elanco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amexdrug 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 Amexdrug 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 Amexdrug 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 Amexdrug i.e., Amexdrug and Elanco Animal go up and down completely randomly.

Pair Corralation between Amexdrug and Elanco Animal

If you would invest  0.20  in Amexdrug on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Amexdrug or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Amexdrug  vs.  Elanco Animal Health

Amexdrug

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amexdrug has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amexdrug is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amexdrug and Elanco Animal

The main advantage of trading using opposite Amexdrug and Elanco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amexdrug 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.

The idea behind Amexdrug and Elanco Animal Health 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.