Correlation Between Stag Industrial and Abbott Laboratories

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

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

Diversification Opportunities for Stag Industrial and Abbott Laboratories

0.04

Correlation Coefficient

Stag Industrial  Abbott Laboratories

Significant diversification

The 3 months correlation between Stag and Abbott is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and Stag Industrial 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 Stag Industrial 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 Stag Industrial i.e., Stag Industrial and Abbott Laboratories go up and down completely randomly.

Pair Corralation between Stag Industrial and Abbott Laboratories

Assuming the 90 days trading horizon Stag Industrial is expected to under-perform the Abbott Laboratories. In addition to that, Stag Industrial is 1.74 times more volatile than Abbott Laboratories. It trades about -0.2 of its total potential returns per unit of risk. Abbott Laboratories is currently generating about 0.07 per unit of volatility. If you would invest  10,844  in Abbott Laboratories on October 8, 2024 and sell it today you would earn a total of  100.00  from holding Abbott Laboratories or generate 0.92% return on investment over 90 days.

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

Stag Industrial  vs.  Abbott Laboratories

Stag Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stag Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Stag Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Abbott Laboratories

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Abbott Laboratories is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Stag Industrial and Abbott Laboratories

The main advantage of trading using opposite Stag Industrial and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stag Industrial 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 Stag Industrial 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.