Correlation Between Eli Lilly and East Side

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

Diversification Opportunities for Eli Lilly and East Side

EliEastDiversified AwayEliEastDiversified Away100%
0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Eli and East is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and East Side Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Side Games 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 East Side. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Side Games has no effect on the direction of Eli Lilly i.e., Eli Lilly and East Side go up and down completely randomly.

Pair Corralation between Eli Lilly and East Side

Assuming the 90 days trading horizon Eli Lilly and is expected to generate 0.5 times more return on investment than East Side. However, Eli Lilly and is 1.98 times less risky than East Side. It trades about -0.11 of its potential returns per unit of risk. East Side Games is currently generating about -0.07 per unit of risk. If you would invest  3,423  in Eli Lilly and on October 16, 2024 and sell it today you would lose (459.00) from holding Eli Lilly and or give up 13.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.39%
ValuesDaily Returns

Eli Lilly and  vs.  East Side Games

 Performance 
JavaScript chart by amCharts 3.21.15NovDec -20-100102030
JavaScript chart by amCharts 3.21.15LLY EAGR
       Timeline  
Eli Lilly 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eli Lilly and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2728293031323334
East Side Games 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.550.60.650.70.75

Eli Lilly and East Side Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.3-2.47-1.64-0.810.00.741.492.242.99 0.030.040.050.060.070.080.090.10
JavaScript chart by amCharts 3.21.15LLY EAGR
       Returns  

Pair Trading with Eli Lilly and East Side

The main advantage of trading using opposite Eli Lilly and East Side positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, East Side 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 East Side will offset losses from the drop in East Side's long position.
The idea behind Eli Lilly and and East Side Games 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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