Correlation Between Abbott Laboratories and Axonics Modulation

Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Axonics Modulation 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 Axonics Modulation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abbott Laboratories and Axonics Modulation Technologies, you can compare the effects of market volatilities on Abbott Laboratories and Axonics Modulation 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 Axonics Modulation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Axonics Modulation.

Diversification Opportunities for Abbott Laboratories and Axonics Modulation

0.13

Correlation Coefficient

Abbott Laboratories  Axonics Modulation

Average diversification

The 3 months correlation between Abbott and Axonics is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Axonics Modulation Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics Modulation 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 Axonics Modulation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics Modulation has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Axonics Modulation go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Axonics Modulation

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 15.02 times less return on investment than Axonics Modulation. In addition to that, Abbott Laboratories is 4.47 times more volatile than Axonics Modulation Technologies. It trades about 0.0 of its total potential returns per unit of risk. Axonics Modulation Technologies is currently generating about 0.31 per unit of volatility. If you would invest  6,901  in Axonics Modulation Technologies on September 23, 2024 and sell it today you would earn a total of  197.00  from holding Axonics Modulation Technologies or generate 2.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.54%
Values	Daily Returns

Abbott Laboratories  vs.  Axonics Modulation Technologie

Abbott Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abbott Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Abbott Laboratories is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Axonics Modulation

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axonics Modulation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axonics Modulation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Abbott Laboratories and Axonics Modulation

The main advantage of trading using opposite Abbott Laboratories and Axonics Modulation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Axonics Modulation 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 Axonics Modulation will offset losses from the drop in Axonics Modulation's long position.

The idea behind Abbott Laboratories and Axonics Modulation Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.