Correlation Between Abbott Laboratories and Biomerica
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Biomerica 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 Biomerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Biomerica, you can compare the effects of market volatilities on Abbott Laboratories and Biomerica 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 Biomerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Biomerica.
Diversification Opportunities for Abbott Laboratories and Biomerica
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Abbott and Biomerica is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica 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 Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Biomerica go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Biomerica
Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.19 times more return on investment than Biomerica. However, Abbott Laboratories is 5.29 times less risky than Biomerica. It trades about 0.07 of its potential returns per unit of risk. Biomerica is currently generating about -0.06 per unit of risk. If you would invest 11,217 in Abbott Laboratories on August 24, 2024 and sell it today you would earn a total of 509.00 from holding Abbott Laboratories or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abbott Laboratories vs. Biomerica
Performance |
| Timeline |
| Abbott Laboratories |
| Biomerica |
Abbott Laboratories and Biomerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and Biomerica
The main advantage of trading using opposite Abbott Laboratories and Biomerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Biomerica 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 Biomerica will offset losses from the drop in Biomerica'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 |
| Biomerica vs. SurModics | Biomerica vs. Movano Inc | Biomerica vs. Ainos Inc | Biomerica vs. Tivic Health Systems |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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