Correlation Between Abbott Laboratories and ENDRA Life

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

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

Diversification Opportunities for Abbott Laboratories and ENDRA Life

-0.11

Correlation Coefficient

Abbott Laboratories  ENDRA Life

Good diversification

The 3 months correlation between Abbott and ENDRA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and ENDRA Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDRA Life Sciences 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 ENDRA Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDRA Life Sciences has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and ENDRA Life go up and down completely randomly.

Pair Corralation between Abbott Laboratories and ENDRA Life

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.1 times more return on investment than ENDRA Life. However, Abbott Laboratories is 9.84 times less risky than ENDRA Life. It trades about 0.02 of its potential returns per unit of risk. ENDRA Life Sciences is currently generating about -0.1 per unit of risk. If you would invest  10,903  in Abbott Laboratories on September 12, 2024 and sell it today you would earn a total of  647.00  from holding Abbott Laboratories or generate 5.93% return on investment over 90 days.

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

Abbott Laboratories  vs.  ENDRA Life Sciences

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.

ENDRA Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENDRA Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Abbott Laboratories and ENDRA Life

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

The idea behind Abbott Laboratories and ENDRA Life Sciences 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.