Correlation Between Elutia and AbbVie
Can any of the company-specific risk be diversified away by investing in both Elutia and AbbVie 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 Elutia and AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elutia Inc and AbbVie Inc, you can compare the effects of market volatilities on Elutia and AbbVie 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 Elutia with a short position of AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elutia and AbbVie.
Diversification Opportunities for Elutia and AbbVie
Good diversification
The 3 months correlation between Elutia and AbbVie is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Elutia Inc and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Elutia 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 Elutia Inc are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Elutia i.e., Elutia and AbbVie go up and down completely randomly.
Pair Corralation between Elutia and AbbVie
Given the investment horizon of 90 days Elutia Inc is expected to generate 4.6 times more return on investment than AbbVie. However, Elutia is 4.6 times more volatile than AbbVie Inc. It trades about 0.04 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.03 per unit of risk. If you would invest 369.00 in Elutia Inc on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Elutia Inc or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elutia Inc vs. AbbVie Inc
Performance |
| Timeline |
| Elutia Inc |
| AbbVie Inc |
Elutia and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elutia and AbbVie
The main advantage of trading using opposite Elutia and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elutia position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Elutia vs. AbbVie Inc | Elutia vs. Eli Lilly and | Elutia vs. Bristol Myers Squibb | Elutia vs. Johnson Johnson |
| AbbVie vs. Merck Company | AbbVie vs. Pfizer Inc | AbbVie vs. Eli Lilly and | AbbVie vs. Bristol Myers Squibb |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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