Correlation Between Eli Lilly and Organon

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

Diversification Opportunities for Eli Lilly and Organon

-0.16

Correlation Coefficient

Eli Lilly  Organon

Good diversification

The 3 months correlation between Eli and Organon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Organon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organon 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 Organon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organon has no effect on the direction of Eli Lilly i.e., Eli Lilly and Organon go up and down completely randomly.

Pair Corralation between Eli Lilly and Organon

Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.73 times more return on investment than Organon. However, Eli Lilly and is 1.37 times less risky than Organon. It trades about 0.05 of its potential returns per unit of risk. Organon Co is currently generating about 0.01 per unit of risk. If you would invest  78,182  in Eli Lilly and on December 27, 2024 and sell it today you would earn a total of  3,985  from holding Eli Lilly and or generate 5.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eli Lilly and  vs.  Organon Co

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 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Eli Lilly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Organon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Organon Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Organon is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eli Lilly and Organon

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

The idea behind Eli Lilly and and Organon Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.