Can any of the company-specific risk be diversified away by investing in both Acrivon Therapeutics and AbbVie 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 Acrivon Therapeutics and AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acrivon Therapeutics Common and AbbVie Inc, you can compare the effects of market volatilities on Acrivon Therapeutics and AbbVie 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 Acrivon Therapeutics with a short position of AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acrivon Therapeutics and AbbVie.
Diversification Opportunities for Acrivon Therapeutics and AbbVie
The 3 months correlation between Acrivon and AbbVie is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Acrivon Therapeutics Common and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Acrivon Therapeutics 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 Acrivon Therapeutics Common are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Acrivon Therapeutics i.e., Acrivon Therapeutics and AbbVie go up and down completely randomly.
Pair Corralation between Acrivon Therapeutics and AbbVie
Given the investment horizon of 90 days Acrivon Therapeutics Common is expected to generate 7.79 times more return on investment than AbbVie. However, Acrivon Therapeutics is 7.79 times more volatile than AbbVie Inc. It trades about 0.12 of its potential returns per unit of risk. AbbVie Inc is currently generating about -0.13 per unit of risk. If you would invest 475.00 in Acrivon Therapeutics Common on March 6, 2024 and sell it today you would earn a total of 297.00 from holding Acrivon Therapeutics Common or generate 62.53% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Acrivon Therapeutics Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Acrivon Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.
Over the last 90 days AbbVie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.