Correlation Between Abbott Laboratories and Echo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Echo Therapeutics 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 Echo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbott Laboratories and Echo Therapeutics, you can compare the effects of market volatilities on Abbott Laboratories and Echo Therapeutics 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 Echo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Echo Therapeutics.
Diversification Opportunities for Abbott Laboratories and Echo Therapeutics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Abbott and Echo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Echo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Therapeutics 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 Echo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Therapeutics has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Echo Therapeutics go up and down completely randomly.
Pair Corralation between Abbott Laboratories and Echo Therapeutics
If you would invest 10,801 in Abbott Laboratories on January 26, 2024 and sell it today you would lose (112.00) from holding Abbott Laboratories or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Abbott Laboratories vs. Echo Therapeutics
Performance |
| Timeline |
| Abbott Laboratories |
| Echo Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Abbott Laboratories and Echo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbott Laboratories and Echo Therapeutics
The main advantage of trading using opposite Abbott Laboratories and Echo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Echo Therapeutics 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 Echo Therapeutics will offset losses from the drop in Echo Therapeutics' long position.| Abbott Laboratories vs. Orthopediatrics Corp | Abbott Laboratories vs. Sight Sciences | Abbott Laboratories vs. Iradimed Co | Abbott Laboratories vs. PulmonxCorp |
| Echo Therapeutics vs. LGI Homes | Echo Therapeutics vs. Skechers USA | Echo Therapeutics vs. Mid Atlantic Home Health | Echo Therapeutics vs. Bausch Lomb Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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