Correlation Between Abbott Laboratories and Apple
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Apple Inc, you can compare the effects of market volatilities on Abbott Laboratories and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Apple.
Diversification Opportunities for Abbott Laboratories and Apple
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Abbott and Apple is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Apple go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Apple
Assuming the 90 days trading horizon Abbott Laboratories is expected to generate 0.88 times more return on investment than Apple. However, Abbott Laboratories is 1.14 times less risky than Apple. It trades about 0.03 of its potential returns per unit of risk. Apple Inc is currently generating about -0.01 per unit of risk. If you would invest 4,610 in Abbott Laboratories on January 20, 2024 and sell it today you would earn a total of 23.00 from holding Abbott Laboratories or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Abbott Laboratories vs. Apple Inc
Performance |
| Timeline |
| Abbott Laboratories |
| Apple Inc |
Abbott Laboratories and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and Apple
The main advantage of trading using opposite Abbott Laboratories and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Abbott Laboratories vs. HDFC Bank Limited | Abbott Laboratories vs. Costco Wholesale | Abbott Laboratories vs. Deutsche Bank Aktiengesellschaft | Abbott Laboratories vs. Ross Stores |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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