Correlation Between Nutranomics and Elanco Animal

Can any of the company-specific risk be diversified away by investing in both Nutranomics and Elanco Animal 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 Nutranomics and Elanco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nutranomics and Elanco Animal Health, you can compare the effects of market volatilities on Nutranomics and Elanco Animal 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 Nutranomics with a short position of Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutranomics and Elanco Animal.

Diversification Opportunities for Nutranomics and Elanco Animal

0.0

Correlation Coefficient

Nutranomics  Elanco Animal

Pay attention - limited upside

The 3 months correlation between Nutranomics and Elanco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nutranomics and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health and Nutranomics 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 Nutranomics are associated (or correlated) with Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Nutranomics i.e., Nutranomics and Elanco Animal go up and down completely randomly.

Pair Corralation between Nutranomics and Elanco Animal

If you would invest  1,186  in Elanco Animal Health on October 23, 2024 and sell it today you would earn a total of  16.00  from holding Elanco Animal Health or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nutranomics  vs.  Elanco Animal Health

Nutranomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nutranomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nutranomics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Elanco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nutranomics and Elanco Animal

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

The idea behind Nutranomics and Elanco Animal Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.