Correlation Between Long Term and Lord Abbett

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

By analyzing existing cross correlation between The Long Term and Lord Abbett Convertible, you can compare the effects of market volatilities on Long Term and Lord Abbett 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 Long Term with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Lord Abbett.

Diversification Opportunities for Long Term and Lord Abbett

0.96

Correlation Coefficient

Long Term  Lord Abbett

Almost no diversification

The 3 months correlation between Long and Lord is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Long Term and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Long Term 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 The Long Term are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Convertible has no effect on the direction of Long Term i.e., Long Term and Lord Abbett go up and down completely randomly.

Pair Corralation between Long Term and Lord Abbett

Assuming the 90 days horizon The Long Term is expected to under-perform the Lord Abbett. In addition to that, Long Term is 2.15 times more volatile than Lord Abbett Convertible. It trades about -0.02 of its total potential returns per unit of risk. Lord Abbett Convertible is currently generating about -0.01 per unit of volatility. If you would invest  1,437  in Lord Abbett Convertible on December 27, 2024 and sell it today you would lose (7.00) from holding Lord Abbett Convertible or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

The Long Term  vs.  Lord Abbett Convertible

Long Term

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Long Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Long Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Long Term and Lord Abbett

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

The idea behind The Long Term and Lord Abbett Convertible 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.