Correlation Between Freedom Holding and AbbVie
Can any of the company-specific risk be diversified away by investing in both Freedom Holding 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 Freedom Holding and AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and AbbVie Inc, you can compare the effects of market volatilities on Freedom Holding 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 Freedom Holding with a short position of AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and AbbVie.
Diversification Opportunities for Freedom Holding and AbbVie
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freedom and AbbVie is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Freedom Holding 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 Freedom Holding Corp 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 Freedom Holding i.e., Freedom Holding and AbbVie go up and down completely randomly.
Pair Corralation between Freedom Holding and AbbVie
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.55 times more return on investment than AbbVie. However, Freedom Holding is 1.55 times more volatile than AbbVie Inc. It trades about 0.31 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.35 per unit of risk. If you would invest 13,463 in Freedom Holding Corp on November 18, 2024 and sell it today you would earn a total of 2,241 from holding Freedom Holding Corp or generate 16.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. AbbVie Inc
Performance |
| Timeline |
| Freedom Holding Corp |
| AbbVie Inc |
Freedom Holding and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and AbbVie
The main advantage of trading using opposite Freedom Holding and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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