Correlation Between EnVVeno Medical and LILLY

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

By analyzing existing cross correlation between enVVeno Medical Corp and LILLY ELI 55, you can compare the effects of market volatilities on EnVVeno Medical and LILLY 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 EnVVeno Medical with a short position of LILLY. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnVVeno Medical and LILLY.

Diversification Opportunities for EnVVeno Medical and LILLY

0.35

Correlation Coefficient

EnVVeno Medical  LILLY

Weak diversification

The 3 months correlation between EnVVeno and LILLY is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding enVVeno Medical Corp and LILLY ELI 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LILLY ELI 55 and EnVVeno Medical 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 enVVeno Medical Corp are associated (or correlated) with LILLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LILLY ELI 55 has no effect on the direction of EnVVeno Medical i.e., EnVVeno Medical and LILLY go up and down completely randomly.

Pair Corralation between EnVVeno Medical and LILLY

Given the investment horizon of 90 days enVVeno Medical Corp is expected to under-perform the LILLY. In addition to that, EnVVeno Medical is 12.05 times more volatile than LILLY ELI 55. It trades about -0.19 of its total potential returns per unit of risk. LILLY ELI 55 is currently generating about -0.14 per unit of volatility. If you would invest  10,453  in LILLY ELI 55 on September 14, 2024 and sell it today you would lose (281.00) from holding LILLY ELI 55 or give up 2.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.69%
Values	Daily Returns

enVVeno Medical Corp  vs.  LILLY ELI 55

enVVeno Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enVVeno Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.

LILLY ELI 55

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LILLY ELI 55 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LILLY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EnVVeno Medical and LILLY

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

The idea behind enVVeno Medical Corp and LILLY ELI 55 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.