Correlation Between Eli Lilly and Intellia Therapeutics

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

Diversification Opportunities for Eli Lilly and Intellia Therapeutics

-0.27

Correlation Coefficient

Eli Lilly  Intellia Therapeutics

Very good diversification

The 3 months correlation between Eli and Intellia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Intellia Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intellia Therapeutics 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 Intellia Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intellia Therapeutics has no effect on the direction of Eli Lilly i.e., Eli Lilly and Intellia Therapeutics go up and down completely randomly.

Pair Corralation between Eli Lilly and Intellia Therapeutics

Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.41 times more return on investment than Intellia Therapeutics. However, Eli Lilly and is 2.44 times less risky than Intellia Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Intellia Therapeutics is currently generating about -0.08 per unit of risk. If you would invest  77,251  in Eli Lilly and on December 28, 2024 and sell it today you would earn a total of  4,916  from holding Eli Lilly and or generate 6.36% 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.  Intellia Therapeutics

Eli Lilly

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish essential indicators, Eli Lilly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intellia Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intellia Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eli Lilly and Intellia Therapeutics

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

The idea behind Eli Lilly and and Intellia Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.