Correlation Between Eic Value and Lord Abbett

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

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

Diversification Opportunities for Eic Value and Lord Abbett

0.62

Correlation Coefficient

Eic Value  Lord Abbett

Poor diversification

The 3 months correlation between Eic and Lord is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and Eic Value 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 Eic Value Fund 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 Health has no effect on the direction of Eic Value i.e., Eic Value and Lord Abbett go up and down completely randomly.

Pair Corralation between Eic Value and Lord Abbett

Assuming the 90 days horizon Eic Value is expected to generate 1.03 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Eic Value Fund is 1.34 times less risky than Lord Abbett. It trades about 0.09 of its potential returns per unit of risk. Lord Abbett Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,494  in Lord Abbett Health on December 3, 2024 and sell it today you would earn a total of  353.00  from holding Lord Abbett Health or generate 23.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Eic Value Fund  vs.  Lord Abbett Health

Eic Value Fund

Risk-Adjusted Performance

Very Weak

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

Lord Abbett Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Eic Value and Lord Abbett

The main advantage of trading using opposite Eic Value and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value 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 Eic Value Fund and Lord Abbett Health 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..