Correlation Between Eli Lilly and Financial

Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Financial 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 Financial 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 Financial 15 Split, you can compare the effects of market volatilities on Eli Lilly and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Financial.

Diversification Opportunities for Eli Lilly and Financial

-0.89

Correlation Coefficient

Eli Lilly  Financial

Pay attention - limited upside

The 3 months correlation between Eli and Financial is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Eli Lilly i.e., Eli Lilly and Financial go up and down completely randomly.

Pair Corralation between Eli Lilly and Financial

Assuming the 90 days trading horizon Eli Lilly and is expected to generate 7.55 times more return on investment than Financial. However, Eli Lilly is 7.55 times more volatile than Financial 15 Split. It trades about 0.06 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.23 per unit of risk. If you would invest  2,808  in Eli Lilly and on September 24, 2024 and sell it today you would earn a total of  50.00  from holding Eli Lilly and or generate 1.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eli Lilly and  vs.  Financial 15 Split

Eli Lilly

Risk-Adjusted Performance

0 of 100

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

Financial 15 Split

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eli Lilly and Financial

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

The idea behind Eli Lilly and and Financial 15 Split 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 Transaction History module to view history of all your transactions and understand their impact on performance.