Correlation Between International Investors and Lord Abbett

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

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

Diversification Opportunities for International Investors and Lord Abbett

0.66

Correlation Coefficient

International Investors  Lord Abbett

Poor diversification

The 3 months correlation between International and Lord is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Lord Abbett Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Investment and International Investors 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 International Investors Gold 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 Investment has no effect on the direction of International Investors i.e., International Investors and Lord Abbett go up and down completely randomly.

Pair Corralation between International Investors and Lord Abbett

Assuming the 90 days horizon International Investors Gold is expected to generate 13.49 times more return on investment than Lord Abbett. However, International Investors is 13.49 times more volatile than Lord Abbett Investment. It trades about 0.27 of its potential returns per unit of risk. Lord Abbett Investment is currently generating about 0.22 per unit of risk. If you would invest  843.00  in International Investors Gold on December 22, 2024 and sell it today you would earn a total of  249.00  from holding International Investors Gold or generate 29.54% return on investment over 90 days.

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

International Investors Gold  vs.  Lord Abbett Investment

International Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, International Investors showed solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Investment are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. 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 International Investors and Lord Abbett

The main advantage of trading using opposite International Investors and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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 International Investors Gold and Lord Abbett Investment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.