Correlation Between Abbott Laboratories and Aurora Spine
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Aurora Spine 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 Abbott Laboratories and Aurora Spine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Aurora Spine, you can compare the effects of market volatilities on Abbott Laboratories and Aurora Spine 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 Abbott Laboratories with a short position of Aurora Spine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Aurora Spine.
Diversification Opportunities for Abbott Laboratories and Aurora Spine
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Abbott and Aurora is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Aurora Spine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with Aurora Spine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Spine has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Aurora Spine go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Aurora Spine
Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.5 times more return on investment than Aurora Spine. However, Abbott Laboratories is 2.02 times less risky than Aurora Spine. It trades about -0.12 of its potential returns per unit of risk. Aurora Spine is currently generating about -0.3 per unit of risk. If you would invest 11,644 in Abbott Laboratories on September 13, 2024 and sell it today you would lose (230.00) from holding Abbott Laboratories or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abbott Laboratories vs. Aurora Spine
Performance |
| Timeline |
| Abbott Laboratories |
| Aurora Spine |
Abbott Laboratories and Aurora Spine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and Aurora Spine
The main advantage of trading using opposite Abbott Laboratories and Aurora Spine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Aurora Spine 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 Aurora Spine will offset losses from the drop in Aurora Spine's long position.| Abbott Laboratories vs. AbbVie Inc | Abbott Laboratories vs. Eli Lilly and | Abbott Laboratories vs. Bristol Myers Squibb | Abbott Laboratories vs. Johnson Johnson |
| Aurora Spine vs. Abbott Laboratories | Aurora Spine vs. Stryker | Aurora Spine vs. Boston Scientific Corp | Aurora Spine vs. Medtronic PLC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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