Correlation Between High Tide and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both High Tide 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 High Tide and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Tide and Eli Lilly and, you can compare the effects of market volatilities on High Tide 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 High Tide with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Tide and Eli Lilly.
Diversification Opportunities for High Tide and Eli Lilly
Excellent diversification
The 3 months correlation between High and Eli is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding High Tide and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and High Tide 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 High Tide 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 High Tide i.e., High Tide and Eli Lilly go up and down completely randomly.
Pair Corralation between High Tide and Eli Lilly
Assuming the 90 days trading horizon High Tide is expected to generate 2.65 times more return on investment than Eli Lilly. However, High Tide is 2.65 times more volatile than Eli Lilly and. It trades about 0.09 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.06 per unit of risk. If you would invest 405.00 in High Tide on September 24, 2024 and sell it today you would earn a total of 28.00 from holding High Tide or generate 6.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
High Tide vs. Eli Lilly and
Performance |
Timeline |
High Tide |
Eli Lilly |
High Tide and Eli Lilly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with High Tide and Eli Lilly
The main advantage of trading using opposite High Tide and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Tide 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.High Tide vs. Slate Grocery REIT | High Tide vs. Roots Corp | High Tide vs. Morguard Real Estate | High Tide vs. Aimia Inc |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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