Correlation Between Eli Lilly and Checkpoint Therapeutics

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

Diversification Opportunities for Eli Lilly and Checkpoint Therapeutics

-0.65

Correlation Coefficient

Eli Lilly  Checkpoint Therapeutics

Excellent diversification

The 3 months correlation between Eli and Checkpoint is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Checkpoint Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Checkpoint Therapeutics 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 Checkpoint Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Checkpoint Therapeutics has no effect on the direction of Eli Lilly i.e., Eli Lilly and Checkpoint Therapeutics go up and down completely randomly.

Pair Corralation between Eli Lilly and Checkpoint Therapeutics

Considering the 90-day investment horizon Eli Lilly and is expected to generate 0.34 times more return on investment than Checkpoint Therapeutics. However, Eli Lilly and is 2.96 times less risky than Checkpoint Therapeutics. It trades about 0.1 of its potential returns per unit of risk. Checkpoint Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  34,417  in Eli Lilly and on September 30, 2024 and sell it today you would earn a total of  43,900  from holding Eli Lilly and or generate 127.55% return on investment over 90 days.

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

Eli Lilly and  vs.  Checkpoint Therapeutics

Eli Lilly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eli Lilly and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Checkpoint Therapeutics

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Eli Lilly and Checkpoint Therapeutics

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

The idea behind Eli Lilly and and Checkpoint Therapeutics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.