Correlation Between Columbia Contrarian and Lord Abbett

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

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

Diversification Opportunities for Columbia Contrarian and Lord Abbett

0.57

Correlation Coefficient

Columbia Contrarian  Lord Abbett

Very weak diversification

The 3 months correlation between Columbia and Lord is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Trarian Core and Lord Abbett Vertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Vertible and Columbia Contrarian 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 Columbia Trarian Core 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 Vertible has no effect on the direction of Columbia Contrarian i.e., Columbia Contrarian and Lord Abbett go up and down completely randomly.

Pair Corralation between Columbia Contrarian and Lord Abbett

Assuming the 90 days horizon Columbia Trarian Core is expected to under-perform the Lord Abbett. In addition to that, Columbia Contrarian is 1.87 times more volatile than Lord Abbett Vertible. It trades about -0.11 of its total potential returns per unit of risk. Lord Abbett Vertible is currently generating about -0.03 per unit of volatility. If you would invest  1,459  in Lord Abbett Vertible on December 1, 2024 and sell it today you would lose (24.00) from holding Lord Abbett Vertible or give up 1.64% of portfolio value over 90 days.

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

Columbia Trarian Core  vs.  Lord Abbett Vertible

Columbia Trarian Core

Risk-Adjusted Performance

Very Weak

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

Lord Abbett Vertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Vertible has generated negative risk-adjusted returns adding no value to fund investors. 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 Columbia Contrarian and Lord Abbett

The main advantage of trading using opposite Columbia Contrarian and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Contrarian 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 Columbia Trarian Core and Lord Abbett Vertible 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.