Correlation Between Nishi-Nippon Railroad and Eli Lilly

Can any of the company-specific risk be diversified away by investing in both Nishi-Nippon Railroad and Eli Lilly 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 Nishi-Nippon Railroad and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nishi Nippon Railroad Co and Eli Lilly and, you can compare the effects of market volatilities on Nishi-Nippon Railroad and Eli Lilly 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 Nishi-Nippon Railroad with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishi-Nippon Railroad and Eli Lilly.

Diversification Opportunities for Nishi-Nippon Railroad and Eli Lilly

-0.02

Correlation Coefficient

Nishi-Nippon Railroad  Eli Lilly

Good diversification

The 3 months correlation between Nishi-Nippon and Eli is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nishi Nippon Railroad Co and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Nishi-Nippon Railroad 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 Nishi Nippon Railroad Co are associated (or correlated) with Eli Lilly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eli Lilly has no effect on the direction of Nishi-Nippon Railroad i.e., Nishi-Nippon Railroad and Eli Lilly go up and down completely randomly.

Pair Corralation between Nishi-Nippon Railroad and Eli Lilly

Assuming the 90 days horizon Nishi Nippon Railroad Co is expected to under-perform the Eli Lilly. In addition to that, Nishi-Nippon Railroad is 1.1 times more volatile than Eli Lilly and. It trades about -0.06 of its total potential returns per unit of risk. Eli Lilly and is currently generating about 0.0 per unit of volatility. If you would invest  76,570  in Eli Lilly and on October 10, 2024 and sell it today you would lose (180.00) from holding Eli Lilly and or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Nishi Nippon Railroad Co  vs.  Eli Lilly and

Nishi Nippon Railroad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nishi Nippon Railroad Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nishi-Nippon Railroad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Nishi-Nippon Railroad and Eli Lilly

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

The idea behind Nishi Nippon Railroad Co and Eli Lilly and 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.