Correlation Between Eli Lilly and ADMA Biologics
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and ADMA Biologics 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 ADMA Biologics 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 ADMA Biologics, you can compare the effects of market volatilities on Eli Lilly and ADMA Biologics 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 ADMA Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and ADMA Biologics.
Diversification Opportunities for Eli Lilly and ADMA Biologics
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eli and ADMA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and ADMA Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADMA Biologics 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 ADMA Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADMA Biologics has no effect on the direction of Eli Lilly i.e., Eli Lilly and ADMA Biologics go up and down completely randomly.
Pair Corralation between Eli Lilly and ADMA Biologics
Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.65 times more return on investment than ADMA Biologics. However, Eli Lilly and is 1.53 times less risky than ADMA Biologics. It trades about 0.13 of its potential returns per unit of risk. ADMA Biologics is currently generating about -0.12 per unit of risk. If you would invest 81,193 in Eli Lilly and on December 3, 2024 and sell it today you would earn a total of 11,768 from holding Eli Lilly and or generate 14.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Eli Lilly and vs. ADMA Biologics
Performance |
Timeline |
Eli Lilly |
ADMA Biologics |
Eli Lilly and ADMA Biologics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eli Lilly and ADMA Biologics
The main advantage of trading using opposite Eli Lilly and ADMA Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, ADMA Biologics 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 ADMA Biologics will offset losses from the drop in ADMA Biologics' long position.Eli Lilly vs. Johnson Johnson | Eli Lilly vs. Bristol Myers Squibb | Eli Lilly vs. AbbVie Inc | Eli Lilly vs. Pfizer 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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