Correlation Between Eli Lilly and DBV Technologies

Can any of the company-specific risk be diversified away by investing in both Eli Lilly and DBV Technologies 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 DBV Technologies 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 DBV Technologies, you can compare the effects of market volatilities on Eli Lilly and DBV Technologies 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 DBV Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eli Lilly and DBV Technologies.

Diversification Opportunities for Eli Lilly and DBV Technologies

-0.83

Correlation Coefficient

Eli Lilly  DBV Technologies

Pay attention - limited upside

The 3 months correlation between Eli and DBV is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and DBV Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBV Technologies 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 DBV Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBV Technologies has no effect on the direction of Eli Lilly i.e., Eli Lilly and DBV Technologies go up and down completely randomly.

Pair Corralation between Eli Lilly and DBV Technologies

Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.2 times more return on investment than DBV Technologies. However, Eli Lilly and is 4.95 times less risky than DBV Technologies. It trades about 0.65 of its potential returns per unit of risk. DBV Technologies is currently generating about -0.42 per unit of risk. If you would invest  81,506  in Eli Lilly and on March 31, 2024 and sell it today you would earn a total of  9,032  from holding Eli Lilly and or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Eli Lilly and  vs.  DBV Technologies

Eli Lilly

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Eli Lilly showed solid returns over the last few months and may actually be approaching a breakup point.

DBV Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DBV Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eli Lilly and DBV Technologies

The main advantage of trading using opposite Eli Lilly and DBV Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eli Lilly position performs unexpectedly, DBV Technologies 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 DBV Technologies will offset losses from the drop in DBV Technologies' long position.

The idea behind Eli Lilly and and DBV Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.