Correlation Between AbbVie and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both AbbVie and Abbott Laboratories 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 AbbVie and Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbbVie Inc and Abbott Laboratories, you can compare the effects of market volatilities on AbbVie and Abbott Laboratories 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 AbbVie with a short position of Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Abbott Laboratories.
Diversification Opportunities for AbbVie and Abbott Laboratories
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AbbVie and Abbott is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and AbbVie 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 AbbVie Inc are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of AbbVie i.e., AbbVie and Abbott Laboratories go up and down completely randomly.
Pair Corralation between AbbVie and Abbott Laboratories
Given the investment horizon of 90 days AbbVie Inc is expected to under-perform the Abbott Laboratories. In addition to that, AbbVie is 2.65 times more volatile than Abbott Laboratories. It trades about -0.08 of its total potential returns per unit of risk. Abbott Laboratories is currently generating about 0.14 per unit of volatility. If you would invest 11,407 in Abbott Laboratories on August 28, 2024 and sell it today you would earn a total of 406.00 from holding Abbott Laboratories or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AbbVie Inc vs. Abbott Laboratories
Performance |
| Timeline |
| AbbVie Inc |
| Abbott Laboratories |
AbbVie and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AbbVie and Abbott Laboratories
The main advantage of trading using opposite AbbVie and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbbVie position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| AbbVie vs. Eliem Therapeutics | AbbVie vs. HCW Biologics | AbbVie vs. Scpharmaceuticals | AbbVie vs. Milestone Pharmaceuticals |
| Abbott Laboratories vs. AbbVie Inc | Abbott Laboratories vs. Eli Lilly and | Abbott Laboratories vs. Bristol Myers Squibb | Abbott Laboratories vs. Johnson Johnson |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |