Correlation Between Lord Abbett and Long Term
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Long Term 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 Long Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Convertible and The Long Term, you can compare the effects of market volatilities on Lord Abbett and Long Term 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 Long Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Long Term.
Diversification Opportunities for Lord Abbett and Long Term
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Long is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and The Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term 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 Convertible are associated (or correlated) with Long Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term has no effect on the direction of Lord Abbett i.e., Lord Abbett and Long Term go up and down completely randomly.
Pair Corralation between Lord Abbett and Long Term
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.49 times more return on investment than Long Term. However, Lord Abbett Convertible is 2.05 times less risky than Long Term. It trades about -0.16 of its potential returns per unit of risk. The Long Term is currently generating about -0.11 per unit of risk. If you would invest 1,481 in Lord Abbett Convertible on December 2, 2024 and sell it today you would lose (32.00) from holding Lord Abbett Convertible or give up 2.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lord Abbett Convertible vs. The Long Term
Performance |
Timeline |
Lord Abbett Convertible |
Long Term |
Lord Abbett and Long Term Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lord Abbett and Long Term
The main advantage of trading using opposite Lord Abbett and Long Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Long Term 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 Long Term will offset losses from the drop in Long Term's long position.Lord Abbett vs. American Century Diversified | Lord Abbett vs. Madison Diversified Income | Lord Abbett vs. Jpmorgan Diversified Fund | Lord Abbett vs. Fidelity Advisor Diversified |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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