Correlation Between AbbVie and Silence Therapeutics
Can any of the company-specific risk be diversified away by investing in both AbbVie and Silence Therapeutics 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 Silence Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbbVie Inc and Silence Therapeutics PLC, you can compare the effects of market volatilities on AbbVie and Silence Therapeutics 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 Silence Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Silence Therapeutics.
Diversification Opportunities for AbbVie and Silence Therapeutics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AbbVie and Silence is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Silence Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silence Therapeutics 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 Silence Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silence Therapeutics PLC has no effect on the direction of AbbVie i.e., AbbVie and Silence Therapeutics go up and down completely randomly.
Pair Corralation between AbbVie and Silence Therapeutics
Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.36 times more return on investment than Silence Therapeutics. However, AbbVie Inc is 2.81 times less risky than Silence Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Silence Therapeutics PLC is currently generating about -0.04 per unit of risk. If you would invest 14,274 in AbbVie Inc on September 2, 2024 and sell it today you would earn a total of 4,019 from holding AbbVie Inc or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AbbVie Inc vs. Silence Therapeutics PLC
Performance |
| Timeline |
| AbbVie Inc |
| Silence Therapeutics PLC |
AbbVie and Silence Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AbbVie and Silence Therapeutics
The main advantage of trading using opposite AbbVie and Silence Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbbVie position performs unexpectedly, Silence Therapeutics 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 Silence Therapeutics will offset losses from the drop in Silence Therapeutics' long position.| AbbVie vs. Tff Pharmaceuticals | AbbVie vs. Eliem Therapeutics | AbbVie vs. Inhibrx | AbbVie vs. Enliven Therapeutics |
| Silence Therapeutics vs. Tff Pharmaceuticals | Silence Therapeutics vs. Eliem Therapeutics | Silence Therapeutics vs. Inhibrx | Silence Therapeutics vs. Enliven Therapeutics |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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