Correlation Between Eli Lilly and Nexalin Technology

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

Diversification Opportunities for Eli Lilly and Nexalin Technology

-0.3

Correlation Coefficient

Eli Lilly  Nexalin Technology

Very good diversification

The 3 months correlation between Eli and Nexalin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology 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 Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of Eli Lilly i.e., Eli Lilly and Nexalin Technology go up and down completely randomly.

Pair Corralation between Eli Lilly and Nexalin Technology

Considering the 90-day investment horizon Eli Lilly is expected to generate 5.43 times less return on investment than Nexalin Technology. But when comparing it to its historical volatility, Eli Lilly and is 9.55 times less risky than Nexalin Technology. It trades about 0.08 of its potential returns per unit of risk. Nexalin Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Nexalin Technology on December 19, 2024 and sell it today you would lose (12.00) from holding Nexalin Technology or give up 38.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Eli Lilly and  vs.  Nexalin Technology

Eli Lilly

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 6 (%) 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.

Nexalin Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Nexalin Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eli Lilly and Nexalin Technology

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

The idea behind Eli Lilly and and Nexalin Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.