Correlation Between Eli Lilly and Grifols SA
Can any of the company-specific risk be diversified away by investing in both Eli Lilly and Grifols SA 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 Grifols SA 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 Grifols SA ADR, you can compare the effects of market volatilities on Eli Lilly and Grifols SA 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 Grifols SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and Grifols SA.
Diversification Opportunities for Eli Lilly and Grifols SA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eli and Grifols is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Grifols SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grifols SA ADR 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 Grifols SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grifols SA ADR has no effect on the direction of Eli Lilly i.e., Eli Lilly and Grifols SA go up and down completely randomly.
Pair Corralation between Eli Lilly and Grifols SA
Considering the 90-day investment horizon Eli Lilly and is expected to under-perform the Grifols SA. But the stock apears to be less risky and, when comparing its historical volatility, Eli Lilly and is 1.38 times less risky than Grifols SA. The stock trades about -0.05 of its potential returns per unit of risk. The Grifols SA ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 689.00 in Grifols SA ADR on February 3, 2024 and sell it today you would lose (10.00) from holding Grifols SA ADR or give up 1.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Eli Lilly and vs. Grifols SA ADR
Performance |
Timeline |
Eli Lilly |
Grifols SA ADR |
Eli Lilly and Grifols SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eli Lilly and Grifols SA
The main advantage of trading using opposite Eli Lilly and Grifols SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, Grifols SA 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 Grifols SA will offset losses from the drop in Grifols SA's long position.Eli Lilly vs. Silver Spike Investment | Eli Lilly vs. Procaps Group SA | Eli Lilly vs. Eagle Pharmaceuticals | Eli Lilly vs. Deciphera Pharmaceuticals LLC |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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