Correlation Between AbbVie and NexGel Warrant

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

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

Diversification Opportunities for AbbVie and NexGel Warrant

-0.55

Correlation Coefficient

AbbVie  NexGel Warrant

Excellent diversification

The 3 months correlation between AbbVie and NexGel is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant 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 NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of AbbVie i.e., AbbVie and NexGel Warrant go up and down completely randomly.

Pair Corralation between AbbVie and NexGel Warrant

Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.16 times more return on investment than NexGel Warrant. However, AbbVie Inc is 6.44 times less risky than NexGel Warrant. It trades about 0.26 of its potential returns per unit of risk. NexGel Warrant is currently generating about -0.07 per unit of risk. If you would invest  17,394  in AbbVie Inc on December 20, 2024 and sell it today you would earn a total of  3,831  from holding AbbVie Inc or generate 22.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.83%
Values	Daily Returns

AbbVie Inc  vs.  NexGel Warrant

AbbVie Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, AbbVie showed solid returns over the last few months and may actually be approaching a breakup point.

NexGel Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NexGel Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with AbbVie and NexGel Warrant

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

The idea behind AbbVie Inc and NexGel Warrant 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.