Correlation Between AbbVie and Horizon Pharma
Can any of the company-specific risk be diversified away by investing in both AbbVie and Horizon Pharma 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 Horizon Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbbVie Inc and Horizon Pharma PLC, you can compare the effects of market volatilities on AbbVie and Horizon Pharma 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 Horizon Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Horizon Pharma.
Diversification Opportunities for AbbVie and Horizon Pharma
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between AbbVie and Horizon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Horizon Pharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Pharma PLC 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 Horizon Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Pharma PLC has no effect on the direction of AbbVie i.e., AbbVie and Horizon Pharma go up and down completely randomly.
Pair Corralation between AbbVie and Horizon Pharma
Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.94 times more return on investment than Horizon Pharma. However, AbbVie Inc is 1.06 times less risky than Horizon Pharma. It trades about 0.05 of its potential returns per unit of risk. Horizon Pharma PLC is currently generating about -0.05 per unit of risk. If you would invest 13,574 in AbbVie Inc on August 27, 2024 and sell it today you would earn a total of 4,121 from holding AbbVie Inc or generate 30.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 25.71% |
| Values | Daily Returns |
AbbVie Inc vs. Horizon Pharma PLC
Performance |
| Timeline |
| AbbVie Inc |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AbbVie and Horizon Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AbbVie and Horizon Pharma
The main advantage of trading using opposite AbbVie and Horizon Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbbVie position performs unexpectedly, Horizon Pharma 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 Horizon Pharma will offset losses from the drop in Horizon Pharma's long position.| AbbVie vs. Eliem Therapeutics | AbbVie vs. HCW Biologics | AbbVie vs. Scpharmaceuticals | AbbVie vs. Milestone Pharmaceuticals |
| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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