Correlation Between Value Grupo and Eli Lilly

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

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

Diversification Opportunities for Value Grupo and Eli Lilly

-0.44

Correlation Coefficient

Value Grupo  Eli Lilly

Very good diversification

The 3 months correlation between Value and Eli is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Value Grupo Financiero and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and Value Grupo 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 Value Grupo Financiero 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 Value Grupo i.e., Value Grupo and Eli Lilly go up and down completely randomly.

Pair Corralation between Value Grupo and Eli Lilly

Assuming the 90 days trading horizon Value Grupo is expected to generate 2.19 times less return on investment than Eli Lilly. But when comparing it to its historical volatility, Value Grupo Financiero is 1.04 times less risky than Eli Lilly. It trades about 0.03 of its potential returns per unit of risk. Eli Lilly and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,582,027  in Eli Lilly and on December 27, 2024 and sell it today you would earn a total of  97,473  from holding Eli Lilly and or generate 6.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Value Grupo Financiero  vs.  Eli Lilly and

Value Grupo Financiero

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Eli Lilly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Value Grupo and Eli Lilly

The main advantage of trading using opposite Value Grupo and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Grupo 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 Value Grupo Financiero 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 Transaction History module to view history of all your transactions and understand their impact on performance.