Correlation Between Lord Abbett and Schwab Small

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

By analyzing existing cross correlation between Lord Abbett Government and Schwab Small Cap Equity, you can compare the effects of market volatilities on Lord Abbett and Schwab Small 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 Schwab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Schwab Small.

Diversification Opportunities for Lord Abbett and Schwab Small

0.0

Correlation Coefficient

Lord Abbett  Schwab Small

Pay attention - limited upside

The 3 months correlation between Lord and Schwab is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Government and Schwab Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Small Cap 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 Government are associated (or correlated) with Schwab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Small Cap has no effect on the direction of Lord Abbett i.e., Lord Abbett and Schwab Small go up and down completely randomly.

Pair Corralation between Lord Abbett and Schwab Small

If you would invest  1,701  in Schwab Small Cap Equity on September 30, 2024 and sell it today you would earn a total of  251.00  from holding Schwab Small Cap Equity or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	34.41%
Values	Daily Returns

Lord Abbett Government  vs.  Schwab Small Cap Equity

Lord Abbett Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Government 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.

Schwab Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Small Cap Equity 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 Lord Abbett and Schwab Small

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

The idea behind Lord Abbett Government and Schwab Small Cap Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.