Correlation Between Abbott Laboratories and Pulmonx Corp

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Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Pulmonx Corp 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 Pulmonx Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Pulmonx Corp, you can compare the effects of market volatilities on Abbott Laboratories and Pulmonx Corp 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 Pulmonx Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Pulmonx Corp.

Diversification Opportunities for Abbott Laboratories and Pulmonx Corp

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Abbott and Pulmonx is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Pulmonx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmonx Corp 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 Pulmonx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmonx Corp has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Pulmonx Corp go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Pulmonx Corp

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.32 times more return on investment than Pulmonx Corp. However, Abbott Laboratories is 3.08 times less risky than Pulmonx Corp. It trades about 0.05 of its potential returns per unit of risk. Pulmonx Corp is currently generating about -0.01 per unit of risk. If you would invest  9,770  in Abbott Laboratories on November 19, 2024 and sell it today you would earn a total of  3,291  from holding Abbott Laboratories or generate 33.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Abbott Laboratories  vs.  Pulmonx Corp

 Performance 
       Timeline  
Abbott Laboratories 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Pulmonx Corp 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Pulmonx Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Pulmonx Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Abbott Laboratories and Pulmonx Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Abbott Laboratories and Pulmonx Corp

The main advantage of trading using opposite Abbott Laboratories and Pulmonx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Pulmonx Corp 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 Pulmonx Corp will offset losses from the drop in Pulmonx Corp's long position.
The idea behind Abbott Laboratories and Pulmonx Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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