Correlation Between Xylo Technologies and AbbVie

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

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

Diversification Opportunities for Xylo Technologies and AbbVie

0.45

Correlation Coefficient

Xylo Technologies  AbbVie

Very weak diversification

The 3 months correlation between Xylo and AbbVie is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xylo Technologies and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and Xylo Technologies 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 Xylo Technologies 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 Xylo Technologies i.e., Xylo Technologies and AbbVie go up and down completely randomly.

Pair Corralation between Xylo Technologies and AbbVie

Given the investment horizon of 90 days Xylo Technologies is expected to generate 5.07 times more return on investment than AbbVie. However, Xylo Technologies is 5.07 times more volatile than AbbVie Inc. It trades about 0.14 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.29 per unit of risk. If you would invest  315.00  in Xylo Technologies on December 18, 2024 and sell it today you would earn a total of  159.00  from holding Xylo Technologies or generate 50.48% return on investment over 90 days.

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

Xylo Technologies  vs.  AbbVie Inc

Xylo Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xylo Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Xylo Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

AbbVie Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, AbbVie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xylo Technologies and AbbVie

The main advantage of trading using opposite Xylo Technologies and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xylo Technologies 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 Xylo Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.