Correlation Between Abbott Laboratories and 908 Devices

Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and 908 Devices 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 908 Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abbott Laboratories and 908 Devices, you can compare the effects of market volatilities on Abbott Laboratories and 908 Devices 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 908 Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and 908 Devices.

Diversification Opportunities for Abbott Laboratories and 908 Devices

-0.16

Correlation Coefficient

Abbott Laboratories  908 Devices

Good diversification

The 3 months correlation between Abbott and 908 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and 908 Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 908 Devices 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 908 Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 908 Devices has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and 908 Devices go up and down completely randomly.

Pair Corralation between Abbott Laboratories and 908 Devices

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.2 times more return on investment than 908 Devices. However, Abbott Laboratories is 4.98 times less risky than 908 Devices. It trades about -0.04 of its potential returns per unit of risk. 908 Devices is currently generating about -0.14 per unit of risk. If you would invest  11,707  in Abbott Laboratories on September 15, 2024 and sell it today you would lose (369.00) from holding Abbott Laboratories or give up 3.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Abbott Laboratories  vs.  908 Devices

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.

908 Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 908 Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Abbott Laboratories and 908 Devices

The main advantage of trading using opposite Abbott Laboratories and 908 Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, 908 Devices 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 908 Devices will offset losses from the drop in 908 Devices' long position.

The idea behind Abbott Laboratories and 908 Devices 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.