Correlation Between WORK Medical and AbbVie

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

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

Diversification Opportunities for WORK Medical and AbbVie

0.23

Correlation Coefficient

WORK Medical  AbbVie

Modest diversification

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

Pair Corralation between WORK Medical and AbbVie

Considering the 90-day investment horizon WORK Medical Technology is expected to generate 6.25 times more return on investment than AbbVie. However, WORK Medical is 6.25 times more volatile than AbbVie Inc. It trades about 0.05 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.04 per unit of risk. If you would invest  360.00  in WORK Medical Technology on October 10, 2024 and sell it today you would earn a total of  22.00  from holding WORK Medical Technology or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	18.99%
Values	Daily Returns

WORK Medical Technology  vs.  AbbVie Inc

WORK Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WORK Medical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 fairly stable fundamental drivers, AbbVie is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WORK Medical and AbbVie

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

The idea behind WORK Medical Technology and AbbVie Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.