Correlation Between AbbVie and Xylo Technologies

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

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

Diversification Opportunities for AbbVie and Xylo Technologies

-0.02

Correlation Coefficient

AbbVie  Xylo Technologies

Good diversification

The 3 months correlation between AbbVie and Xylo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Xylo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xylo Technologies 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 Xylo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xylo Technologies has no effect on the direction of AbbVie i.e., AbbVie and Xylo Technologies go up and down completely randomly.

Pair Corralation between AbbVie and Xylo Technologies

Given the investment horizon of 90 days AbbVie Inc is expected to generate 0.25 times more return on investment than Xylo Technologies. However, AbbVie Inc is 4.02 times less risky than Xylo Technologies. It trades about 0.04 of its potential returns per unit of risk. Xylo Technologies is currently generating about -0.01 per unit of risk. If you would invest  14,002  in AbbVie Inc on October 11, 2024 and sell it today you would earn a total of  3,848  from holding AbbVie Inc or generate 27.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

AbbVie Inc  vs.  Xylo Technologies

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 latest conflicting 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.

Xylo Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xylo Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Xylo Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AbbVie and Xylo Technologies

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

The idea behind AbbVie Inc and Xylo Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.