Correlation Between Lord Abbett and Invesco Amt-free

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

By analyzing existing cross correlation between Lord Abbett Vertible and Invesco Amt Free Municipal, you can compare the effects of market volatilities on Lord Abbett and Invesco Amt-free 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 Invesco Amt-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Invesco Amt-free.

Diversification Opportunities for Lord Abbett and Invesco Amt-free

0.46

Correlation Coefficient

Lord Abbett  Invesco Amt-free

Very weak diversification

The 3 months correlation between Lord and Invesco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Vertible and Invesco Amt Free Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Amt Free 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 Vertible are associated (or correlated) with Invesco Amt-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Amt Free has no effect on the direction of Lord Abbett i.e., Lord Abbett and Invesco Amt-free go up and down completely randomly.

Pair Corralation between Lord Abbett and Invesco Amt-free

Assuming the 90 days horizon Lord Abbett Vertible is expected to under-perform the Invesco Amt-free. In addition to that, Lord Abbett is 2.63 times more volatile than Invesco Amt Free Municipal. It trades about -0.05 of its total potential returns per unit of risk. Invesco Amt Free Municipal is currently generating about -0.09 per unit of volatility. If you would invest  689.00  in Invesco Amt Free Municipal on October 11, 2024 and sell it today you would lose (7.00) from holding Invesco Amt Free Municipal or give up 1.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

Lord Abbett Vertible  vs.  Invesco Amt Free Municipal

Lord Abbett Vertible

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Vertible are ranked lower than 7 (%) 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.

Invesco Amt Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lord Abbett and Invesco Amt-free

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

The idea behind Lord Abbett Vertible and Invesco Amt Free Municipal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.