Correlation Between AbbVie and WORK Medical

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

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

Diversification Opportunities for AbbVie and WORK Medical

0.23

Correlation Coefficient

AbbVie  WORK Medical

Modest diversification

The 3 months correlation between AbbVie and WORK is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and WORK Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WORK Medical Technology 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 WORK Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WORK Medical Technology has no effect on the direction of AbbVie i.e., AbbVie and WORK Medical go up and down completely randomly.

Pair Corralation between AbbVie and WORK Medical

Given the investment horizon of 90 days AbbVie is expected to generate 6.91 times less return on investment than WORK Medical. But when comparing it to its historical volatility, AbbVie Inc is 6.25 times less risky than WORK Medical. It trades about 0.04 of its potential returns per unit of risk. WORK Medical Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  360.00  in WORK Medical Technology on October 10, 2024 and sell it today you would earn a total of  22.00  from holding WORK Medical Technology or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	18.99%
Values	Daily Returns

AbbVie Inc  vs.  WORK Medical Technology

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.

WORK Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WORK Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AbbVie and WORK Medical

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

The idea behind AbbVie Inc and WORK Medical Technology 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.