Correlation Between Lord Abbett and Clearbridge Aggressive

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Clearbridge Aggressive 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 Clearbridge Aggressive 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 Clearbridge Aggressive Growth, you can compare the effects of market volatilities on Lord Abbett and Clearbridge Aggressive 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 Clearbridge Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Clearbridge Aggressive.

Diversification Opportunities for Lord Abbett and Clearbridge Aggressive

0.94

Correlation Coefficient

Lord Abbett  Clearbridge Aggressive

Almost no diversification

The 3 months correlation between Lord and Clearbridge is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Vertible and Clearbridge Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Aggressive 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 Clearbridge Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Aggressive has no effect on the direction of Lord Abbett i.e., Lord Abbett and Clearbridge Aggressive go up and down completely randomly.

Pair Corralation between Lord Abbett and Clearbridge Aggressive

Assuming the 90 days horizon Lord Abbett Vertible is expected to generate 0.56 times more return on investment than Clearbridge Aggressive. However, Lord Abbett Vertible is 1.79 times less risky than Clearbridge Aggressive. It trades about -0.01 of its potential returns per unit of risk. Clearbridge Aggressive Growth is currently generating about -0.07 per unit of risk. If you would invest  1,465  in Lord Abbett Vertible on December 22, 2024 and sell it today you would lose (10.00) from holding Lord Abbett Vertible or give up 0.68% of portfolio value over 90 days.

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

Lord Abbett Vertible  vs.  Clearbridge Aggressive Growth

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 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.

Clearbridge Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearbridge Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Clearbridge Aggressive 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 Clearbridge Aggressive

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

The idea behind Lord Abbett Vertible and Clearbridge Aggressive Growth 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.