Correlation Between Abbott Laboratories and ImpediMed
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and ImpediMed 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 ImpediMed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and ImpediMed Limited, you can compare the effects of market volatilities on Abbott Laboratories and ImpediMed 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 ImpediMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and ImpediMed.
Diversification Opportunities for Abbott Laboratories and ImpediMed
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Abbott and ImpediMed is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and ImpediMed Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImpediMed Limited 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 ImpediMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImpediMed Limited has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and ImpediMed go up and down completely randomly.
Pair Corralation between Abbott Laboratories and ImpediMed
Considering the 90-day investment horizon Abbott Laboratories is expected to generate 38.2 times less return on investment than ImpediMed. But when comparing it to its historical volatility, Abbott Laboratories is 18.39 times less risky than ImpediMed. It trades about 0.03 of its potential returns per unit of risk. ImpediMed Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8.00 in ImpediMed Limited on September 12, 2024 and sell it today you would lose (3.79) from holding ImpediMed Limited or give up 47.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Abbott Laboratories vs. ImpediMed Limited
Performance |
| Timeline |
| Abbott Laboratories |
| ImpediMed Limited |
Abbott Laboratories and ImpediMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and ImpediMed
The main advantage of trading using opposite Abbott Laboratories and ImpediMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, ImpediMed 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 ImpediMed will offset losses from the drop in ImpediMed'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 |
| ImpediMed vs. Abbott Laboratories | ImpediMed vs. Stryker | ImpediMed vs. Boston Scientific Corp | ImpediMed 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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