Correlation Between Invesco Gold and Lord Abbett

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

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

Diversification Opportunities for Invesco Gold and Lord Abbett

0.74

Correlation Coefficient

Invesco Gold  Lord Abbett

Poor diversification

The 3 months correlation between Invesco and Lord is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Gold Special 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 Invesco Gold 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 Invesco Gold Special 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 Invesco Gold i.e., Invesco Gold and Lord Abbett go up and down completely randomly.

Pair Corralation between Invesco Gold and Lord Abbett

Assuming the 90 days horizon Invesco Gold Special is expected to generate 13.24 times more return on investment than Lord Abbett. However, Invesco Gold is 13.24 times more volatile than Lord Abbett Investment. It trades about 0.24 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  2,601  in Invesco Gold Special on December 20, 2024 and sell it today you would earn a total of  636.00  from holding Invesco Gold Special or generate 24.45% return on investment over 90 days.

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

Invesco Gold Special  vs.  Lord Abbett Investment

Invesco Gold Special

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Gold Special are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Gold 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 technical and fundamental 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 Invesco Gold and Lord Abbett

The main advantage of trading using opposite Invesco Gold and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Gold 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 Invesco Gold Special 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.