Correlation Between SurModics and Abbott Laboratories

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

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

Diversification Opportunities for SurModics and Abbott Laboratories

0.0

Correlation Coefficient

SurModics  Abbott Laboratories

Pay attention - limited upside

The 3 months correlation between SurModics and Abbott is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and SurModics 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 SurModics are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of SurModics i.e., SurModics and Abbott Laboratories go up and down completely randomly.

Pair Corralation between SurModics and Abbott Laboratories

Given the investment horizon of 90 days SurModics is expected to generate 4.79 times less return on investment than Abbott Laboratories. But when comparing it to its historical volatility, SurModics is 1.67 times less risky than Abbott Laboratories. It trades about 0.02 of its potential returns per unit of risk. Abbott Laboratories is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,412  in Abbott Laboratories on August 31, 2024 and sell it today you would earn a total of  483.00  from holding Abbott Laboratories or generate 4.23% return on investment over 90 days.

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

SurModics  vs.  Abbott Laboratories

SurModics

Risk-Adjusted Performance

1 of 100

Weak

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

Abbott Laboratories

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 5 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SurModics and Abbott Laboratories

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

The idea behind SurModics and Abbott Laboratories 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.