Correlation Between AbbVie and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both AbbVie and Scilex Holding 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 Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbbVie Inc and Scilex Holding, you can compare the effects of market volatilities on AbbVie and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Scilex Holding.
Diversification Opportunities for AbbVie and Scilex Holding
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AbbVie and Scilex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of AbbVie i.e., AbbVie and Scilex Holding go up and down completely randomly.
Pair Corralation between AbbVie and Scilex Holding
Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.47 times more return on investment than Scilex Holding. However, AbbVie Inc is 2.13 times less risky than Scilex Holding. It trades about -0.04 of its potential returns per unit of risk. Scilex Holding is currently generating about -0.23 per unit of risk. If you would invest 18,968 in AbbVie Inc on August 29, 2024 and sell it today you would lose (854.00) from holding AbbVie Inc or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AbbVie Inc vs. Scilex Holding
Performance |
| Timeline |
| AbbVie Inc |
| Scilex Holding |
AbbVie and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AbbVie and Scilex Holding
The main advantage of trading using opposite AbbVie and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbbVie position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| AbbVie vs. Merck Company | AbbVie vs. Pfizer Inc | AbbVie vs. Eli Lilly and | AbbVie vs. Bristol Myers Squibb |
| Scilex Holding vs. AstraZeneca PLC ADR | Scilex Holding vs. Gilead Sciences | Scilex Holding vs. Bristol Myers Squibb | Scilex Holding vs. Amgen Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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