Correlation Between Lord Abbett and William Blair

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

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

Diversification Opportunities for Lord Abbett and William Blair

0.51

Correlation Coefficient

Lord Abbett  William Blair

Very weak diversification

The 3 months correlation between Lord and William is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Climate and William Blair Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small and Lord Abbett 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 Lord Abbett Climate are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Lord Abbett i.e., Lord Abbett and William Blair go up and down completely randomly.

Pair Corralation between Lord Abbett and William Blair

Assuming the 90 days horizon Lord Abbett Climate is expected to generate 0.15 times more return on investment than William Blair. However, Lord Abbett Climate is 6.63 times less risky than William Blair. It trades about -0.05 of its potential returns per unit of risk. William Blair Small is currently generating about -0.05 per unit of risk. If you would invest  844.00  in Lord Abbett Climate on October 11, 2024 and sell it today you would lose (5.00) from holding Lord Abbett Climate or give up 0.59% of portfolio value over 90 days.

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

Lord Abbett Climate  vs.  William Blair Small

Lord Abbett Climate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Climate 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.

William Blair Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lord Abbett and William Blair

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

The idea behind Lord Abbett Climate and William Blair Small 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.