Correlation Between Elanco Animal and Silver Spike

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

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

Diversification Opportunities for Elanco Animal and Silver Spike

-0.73

Correlation Coefficient

Elanco Animal  Silver Spike

Pay attention - limited upside

The 3 months correlation between Elanco and Silver is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Elanco Animal Health and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment and Elanco Animal 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 Elanco Animal Health are associated (or correlated) with Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Elanco Animal i.e., Elanco Animal and Silver Spike go up and down completely randomly.

Pair Corralation between Elanco Animal and Silver Spike

Given the investment horizon of 90 days Elanco Animal is expected to generate 3.62 times less return on investment than Silver Spike. In addition to that, Elanco Animal is 1.79 times more volatile than Silver Spike Investment. It trades about 0.02 of its total potential returns per unit of risk. Silver Spike Investment is currently generating about 0.11 per unit of volatility. If you would invest  826.00  in Silver Spike Investment on September 14, 2024 and sell it today you would earn a total of  454.00  from holding Silver Spike Investment or generate 54.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.65%
Values	Daily Returns

Elanco Animal Health  vs.  Silver Spike Investment

Elanco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elanco Animal Health 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elanco Animal and Silver Spike

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

The idea behind Elanco Animal Health and Silver Spike Investment 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 Commodity Directory module to find actively traded commodities issued by global exchanges.