Correlation Between IPC MEXICO and Eli Lilly
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO 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 IPC MEXICO and Eli Lilly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Eli Lilly and, you can compare the effects of market volatilities on IPC MEXICO 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 IPC MEXICO with a short position of Eli Lilly. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Eli Lilly.
Diversification Opportunities for IPC MEXICO and Eli Lilly
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPC and Eli is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Eli Lilly and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eli Lilly and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Eli Lilly go up and down completely randomly.
Pair Corralation between IPC MEXICO and Eli Lilly
Assuming the 90 days trading horizon IPC MEXICO is expected to generate 0.38 times more return on investment than Eli Lilly. However, IPC MEXICO is 2.66 times less risky than Eli Lilly. It trades about -0.02 of its potential returns per unit of risk. Eli Lilly and is currently generating about -0.04 per unit of risk. If you would invest 5,757,115 in IPC MEXICO on February 7, 2024 and sell it today you would lose (28,820) from holding IPC MEXICO or give up 0.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 90.91% |
Values | Daily Returns |
IPC MEXICO vs. Eli Lilly and
Performance |
Timeline |
IPC MEXICO and Eli Lilly Volatility Contrast
Predicted Return Density |
Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
Eli Lilly and
Pair trading matchups for Eli Lilly
Pair Trading with IPC MEXICO and Eli Lilly
The main advantage of trading using opposite IPC MEXICO and Eli Lilly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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.IPC MEXICO vs. Micron Technology | IPC MEXICO vs. Air Transport Services | IPC MEXICO vs. Verizon Communications | IPC MEXICO vs. Delta Air Lines |
Eli Lilly vs. Grupo Sports World | Eli Lilly vs. First Majestic Silver | Eli Lilly vs. Air Transport Services | Eli Lilly vs. United Airlines Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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