Correlation Between Ritchie Bros and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros 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 Ritchie Bros and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Eli Lilly and, you can compare the effects of market volatilities on Ritchie Bros 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 Ritchie Bros with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Eli Lilly.
Diversification Opportunities for Ritchie Bros and Eli Lilly
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ritchie and Eli is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Ritchie Bros 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 Ritchie Bros Auctioneers 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 Ritchie Bros i.e., Ritchie Bros and Eli Lilly go up and down completely randomly.
Pair Corralation between Ritchie Bros and Eli Lilly
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.83 times more return on investment than Eli Lilly. However, Ritchie Bros Auctioneers is 1.2 times less risky than Eli Lilly. It trades about 0.08 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.05 per unit of risk. If you would invest 7,553 in Ritchie Bros Auctioneers on September 24, 2024 and sell it today you would earn a total of 5,453 from holding Ritchie Bros Auctioneers or generate 72.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 64.06% |
Values | Daily Returns |
Ritchie Bros Auctioneers vs. Eli Lilly and
Performance |
Timeline |
Ritchie Bros Auctioneers |
Eli Lilly |
Ritchie Bros and Eli Lilly Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ritchie Bros and Eli Lilly
The main advantage of trading using opposite Ritchie Bros and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros 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.Ritchie Bros vs. Baylin Technologies | Ritchie Bros vs. Kits Eyecare | Ritchie Bros vs. Greenlane Renewables | Ritchie Bros vs. Supremex |
Eli Lilly vs. Millbank Mining Corp | Eli Lilly vs. Calian Technologies | Eli Lilly vs. Xtract One Technologies | Eli Lilly vs. Sparx Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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