Correlation Between Cable One and Elanco Animal

Can any of the company-specific risk be diversified away by investing in both Cable One and Elanco Animal 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 Cable One and Elanco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cable One and Elanco Animal Health, you can compare the effects of market volatilities on Cable One and Elanco Animal 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 Cable One with a short position of Elanco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Elanco Animal.

Diversification Opportunities for Cable One and Elanco Animal

-0.78

Correlation Coefficient

Cable One  Elanco Animal

Pay attention - limited upside

The 3 months correlation between Cable and Elanco is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Elanco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanco Animal Health and Cable One 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 Cable One are associated (or correlated) with Elanco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanco Animal Health has no effect on the direction of Cable One i.e., Cable One and Elanco Animal go up and down completely randomly.

Pair Corralation between Cable One and Elanco Animal

Given the investment horizon of 90 days Cable One is expected to under-perform the Elanco Animal. In addition to that, Cable One is 1.08 times more volatile than Elanco Animal Health. It trades about -0.09 of its total potential returns per unit of risk. Elanco Animal Health is currently generating about 0.17 per unit of volatility. If you would invest  951.00  in Elanco Animal Health on May 6, 2025 and sell it today you would earn a total of  428.00  from holding Elanco Animal Health or generate 45.01% return on investment over 90 days.

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

Cable One  vs.  Elanco Animal Health

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Elanco Animal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elanco Animal Health are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Elanco Animal displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Elanco Animal

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

The idea behind Cable One and Elanco Animal Health 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.