Correlation Between Elanco Animal and Nutranomics

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

Diversification Opportunities for Elanco Animal and Nutranomics

-0.28

Correlation Coefficient

Elanco Animal  Nutranomics

Very good diversification

The 3 months correlation between Elanco and Nutranomics is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Nutranomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutranomics 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 Nutranomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutranomics has no effect on the direction of Elanco Animal i.e., Elanco Animal and Nutranomics go up and down completely randomly.

Pair Corralation between Elanco Animal and Nutranomics

If you would invest  0.01  in Nutranomics on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Nutranomics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Elanco Animal Health  vs.  Nutranomics

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.

Nutranomics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elanco Animal and Nutranomics

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

The idea behind Elanco Animal Health and Nutranomics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.