Correlation Between Eli Lilly and Orthofix Medical

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

Diversification Opportunities for Eli Lilly and Orthofix Medical

0.39

Correlation Coefficient

Eli Lilly  Orthofix Medical

Weak diversification

The 3 months correlation between Eli and Orthofix is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Eli Lilly and and Orthofix Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orthofix Medical 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 Orthofix Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orthofix Medical has no effect on the direction of Eli Lilly i.e., Eli Lilly and Orthofix Medical go up and down completely randomly.

Pair Corralation between Eli Lilly and Orthofix Medical

Considering the 90-day investment horizon Eli Lilly is expected to generate 3.87 times less return on investment than Orthofix Medical. But when comparing it to its historical volatility, Eli Lilly and is 1.23 times less risky than Orthofix Medical. It trades about 0.07 of its potential returns per unit of risk. Orthofix Medical is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,417  in Orthofix Medical on August 5, 2025 and sell it today you would earn a total of  127.00  from holding Orthofix Medical or generate 8.96% return on investment over 90 days.

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

Eli Lilly and  vs.  Orthofix Medical

Eli Lilly

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Eli Lilly and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish essential indicators, Eli Lilly showed solid returns over the last few months and may actually be approaching a breakup point.

Orthofix Medical

Risk-Adjusted Performance

Good

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

Pair Trading with Eli Lilly and Orthofix Medical

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

The idea behind Eli Lilly and and Orthofix Medical 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.