Correlation Between Eli Lilly and AGF Management

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

By analyzing existing cross correlation between Eli Lilly and and AGF Management Limited, you can compare the effects of market volatilities on Eli Lilly and AGF Management 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 Eli Lilly with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and AGF Management.

Diversification Opportunities for Eli Lilly and AGF Management

0.66

Correlation Coefficient

Eli Lilly  AGF Management

Poor diversification

The 3 months correlation between Eli and AGF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Eli Lilly 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 Eli Lilly and are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Eli Lilly i.e., Eli Lilly and AGF Management go up and down completely randomly.

Pair Corralation between Eli Lilly and AGF Management

Assuming the 90 days trading horizon Eli Lilly and is expected to generate 0.91 times more return on investment than AGF Management. However, Eli Lilly and is 1.09 times less risky than AGF Management. It trades about 0.03 of its potential returns per unit of risk. AGF Management Limited is currently generating about -0.08 per unit of risk. If you would invest  72,974  in Eli Lilly and on December 19, 2024 and sell it today you would earn a total of  1,696  from holding Eli Lilly and or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Eli Lilly and  vs.  AGF Management Limited

Eli Lilly

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eli Lilly is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Eli Lilly and AGF Management

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

The idea behind Eli Lilly and and AGF Management Limited 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.