Correlation Between Aurora Spine and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both Aurora Spine and Abbott Laboratories 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 Aurora Spine and Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Spine and Abbott Laboratories, you can compare the effects of market volatilities on Aurora Spine and Abbott Laboratories 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 Aurora Spine with a short position of Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Spine and Abbott Laboratories.
Diversification Opportunities for Aurora Spine and Abbott Laboratories
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and Abbott is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Spine and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and Aurora Spine 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 Aurora Spine are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of Aurora Spine i.e., Aurora Spine and Abbott Laboratories go up and down completely randomly.
Pair Corralation between Aurora Spine and Abbott Laboratories
Assuming the 90 days horizon Aurora Spine is expected to generate 4.29 times more return on investment than Abbott Laboratories. However, Aurora Spine is 4.29 times more volatile than Abbott Laboratories. It trades about 0.02 of its potential returns per unit of risk. Abbott Laboratories is currently generating about 0.02 per unit of risk. If you would invest 31.00 in Aurora Spine on September 13, 2024 and sell it today you would lose (2.00) from holding Aurora Spine or give up 6.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aurora Spine vs. Abbott Laboratories
Performance |
Timeline |
Aurora Spine |
Abbott Laboratories |
Aurora Spine and Abbott Laboratories Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aurora Spine and Abbott Laboratories
The main advantage of trading using opposite Aurora Spine and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Spine position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.Aurora Spine vs. Abbott Laboratories | Aurora Spine vs. Stryker | Aurora Spine vs. Boston Scientific Corp | Aurora Spine vs. Medtronic PLC |
Abbott Laboratories vs. AbbVie Inc | Abbott Laboratories vs. Eli Lilly and | Abbott Laboratories vs. Bristol Myers Squibb | Abbott Laboratories vs. Johnson Johnson |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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