Correlation Between Abbott Laboratories and ReWalk Robotics

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

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

Diversification Opportunities for Abbott Laboratories and ReWalk Robotics

-0.23

Correlation Coefficient

Abbott Laboratories  ReWalk Robotics

Very good diversification

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

Pair Corralation between Abbott Laboratories and ReWalk Robotics

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 1.75 times less return on investment than ReWalk Robotics. But when comparing it to its historical volatility, Abbott Laboratories is 6.82 times less risky than ReWalk Robotics. It trades about 0.18 of its potential returns per unit of risk. ReWalk Robotics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  186.00  in ReWalk Robotics on December 28, 2024 and sell it today you would lose (3.00) from holding ReWalk Robotics or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Abbott Laboratories  vs.  ReWalk Robotics

Abbott Laboratories

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

ReWalk Robotics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ReWalk Robotics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ReWalk Robotics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abbott Laboratories and ReWalk Robotics

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

The idea behind Abbott Laboratories and ReWalk Robotics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.