Correlation Between AstraZeneca PLC and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC 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 AstraZeneca PLC and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC ADR and Eli Lilly and, you can compare the effects of market volatilities on AstraZeneca PLC 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 AstraZeneca PLC with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Eli Lilly.
Diversification Opportunities for AstraZeneca PLC and Eli Lilly
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AstraZeneca and Eli is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and AstraZeneca PLC 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 AstraZeneca PLC ADR 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 AstraZeneca PLC i.e., AstraZeneca PLC and Eli Lilly go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Eli Lilly
Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 0.88 times more return on investment than Eli Lilly. However, AstraZeneca PLC ADR is 1.14 times less risky than Eli Lilly. It trades about 0.2 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.15 per unit of risk. If you would invest 6,573 in AstraZeneca PLC ADR on January 20, 2024 and sell it today you would earn a total of 263.00 from holding AstraZeneca PLC ADR or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC ADR vs. Eli Lilly and
Performance |
| Timeline |
| AstraZeneca PLC ADR |
| Eli Lilly |
AstraZeneca PLC and Eli Lilly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Eli Lilly
The main advantage of trading using opposite AstraZeneca PLC and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC 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.| AstraZeneca PLC vs. Alkermes Plc | AstraZeneca PLC vs. Ironwood Pharmaceuticals | AstraZeneca PLC vs. Deciphera Pharmaceuticals LLC | AstraZeneca PLC vs. Eagle Pharmaceuticals |
| Eli Lilly vs. Alkermes Plc | Eli Lilly vs. Ironwood Pharmaceuticals | Eli Lilly vs. Deciphera Pharmaceuticals LLC | Eli Lilly vs. Eagle Pharmaceuticals |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |