Correlation Between Allergan Plc and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Allergan Plc and AstraZeneca PLC 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 Allergan Plc and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allergan Plc and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Allergan Plc and AstraZeneca PLC 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 Allergan Plc with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allergan Plc and AstraZeneca PLC.
Diversification Opportunities for Allergan Plc and AstraZeneca PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Allergan and AstraZeneca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allergan Plc and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Allergan Plc 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 Allergan Plc are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Allergan Plc i.e., Allergan Plc and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Allergan Plc and AstraZeneca PLC
If you would invest 6,210 in AstraZeneca PLC ADR on January 19, 2024 and sell it today you would earn a total of 626.00 from holding AstraZeneca PLC ADR or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Allergan Plc vs. AstraZeneca PLC ADR
Performance |
| Timeline |
| Allergan Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AstraZeneca PLC ADR |
Allergan Plc and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allergan Plc and AstraZeneca PLC
The main advantage of trading using opposite Allergan Plc and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allergan Plc position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Allergan Plc vs. Amkor Technology | Allergan Plc vs. Eastern Co | Allergan Plc vs. Toro Co | Allergan Plc vs. Micron Technology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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