Correlation Between Abbott Laboratories and Nano X

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

By analyzing existing cross correlation between Abbott Laboratories and Nano X Imaging, you can compare the effects of market volatilities on Abbott Laboratories and Nano X 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 Nano X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Nano X.

Diversification Opportunities for Abbott Laboratories and Nano X

0.11

Correlation Coefficient

Abbott Laboratories  Nano X

Average diversification

The 3 months correlation between Abbott and Nano is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Nano X Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano X Imaging 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 Nano X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano X Imaging has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Nano X go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Nano X

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 1.57 times less return on investment than Nano X. But when comparing it to its historical volatility, Abbott Laboratories is 3.68 times less risky than Nano X. It trades about 0.05 of its potential returns per unit of risk. Nano X Imaging is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  598.00  in Nano X Imaging on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Nano X Imaging or generate 0.67% return on investment over 90 days.

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

Abbott Laboratories  vs.  Nano X Imaging

Abbott Laboratories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Abbott Laboratories is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nano X Imaging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nano X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Abbott Laboratories and Nano X

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

The idea behind Abbott Laboratories and Nano X Imaging 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.