Correlation Between Federal National and AbbVie
Can any of the company-specific risk be diversified away by investing in both Federal National 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 Federal National and AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and AbbVie Inc, you can compare the effects of market volatilities on Federal National 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 Federal National with a short position of AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and AbbVie.
Diversification Opportunities for Federal National and AbbVie
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and AbbVie is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Federal National 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 Federal National Mortgage 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 Federal National i.e., Federal National and AbbVie go up and down completely randomly.
Pair Corralation between Federal National and AbbVie
Assuming the 90 days horizon Federal National is expected to generate 31.03 times less return on investment than AbbVie. But when comparing it to its historical volatility, Federal National Mortgage is 1.03 times less risky than AbbVie. It trades about 0.01 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 17,683 in AbbVie Inc on November 9, 2024 and sell it today you would earn a total of 1,614 from holding AbbVie Inc or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. AbbVie Inc
Performance |
| Timeline |
| Federal National Mortgage |
| AbbVie Inc |
Federal National and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and AbbVie
The main advantage of trading using opposite Federal National and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National 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.| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |