Correlation Between AbbVie and Altimmune

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

By analyzing existing cross correlation between AbbVie Inc and Altimmune, you can compare the effects of market volatilities on AbbVie and Altimmune 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 AbbVie with a short position of Altimmune. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Altimmune.

Diversification Opportunities for AbbVie and Altimmune

-0.7

Correlation Coefficient

AbbVie  Altimmune

Excellent diversification

The 3 months correlation between AbbVie and Altimmune is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune and AbbVie 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 AbbVie Inc are associated (or correlated) with Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of AbbVie i.e., AbbVie and Altimmune go up and down completely randomly.

Pair Corralation between AbbVie and Altimmune

Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.26 times more return on investment than Altimmune. However, AbbVie Inc is 3.92 times less risky than Altimmune. It trades about 0.08 of its potential returns per unit of risk. Altimmune is currently generating about -0.35 per unit of risk. If you would invest  17,646  in AbbVie Inc on October 5, 2024 and sell it today you would earn a total of  298.00  from holding AbbVie Inc or generate 1.69% return on investment over 90 days.

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

AbbVie Inc  vs.  Altimmune

AbbVie Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AbbVie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, AbbVie is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Altimmune

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altimmune are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Altimmune unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AbbVie and Altimmune

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

The idea behind AbbVie Inc and Altimmune 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.