Correlation Between Lord Abbett and Amg Southernsun

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

Diversification Opportunities for Lord Abbett and Amg Southernsun

0.15

Correlation Coefficient

Lord Abbett  Amg Southernsun

Average diversification

The 3 months correlation between Lord and Amg is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Vertible and Amg Southernsun Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Small 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 Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Small has no effect on the direction of Lord Abbett i.e., Lord Abbett and Amg Southernsun go up and down completely randomly.

Pair Corralation between Lord Abbett and Amg Southernsun

Assuming the 90 days horizon Lord Abbett Vertible is expected to generate 0.32 times more return on investment than Amg Southernsun. However, Lord Abbett Vertible is 3.16 times less risky than Amg Southernsun. It trades about 0.17 of its potential returns per unit of risk. Amg Southernsun Small is currently generating about -0.07 per unit of risk. If you would invest  1,405  in Lord Abbett Vertible on October 24, 2024 and sell it today you would earn a total of  100.00  from holding Lord Abbett Vertible or generate 7.12% return on investment over 90 days.

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

Lord Abbett Vertible  vs.  Amg Southernsun Small

Lord Abbett Vertible

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Vertible are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amg Southernsun Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Southernsun Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Amg Southernsun

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

The idea behind Lord Abbett Vertible and Amg Southernsun Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.