Correlation Between Lord Abbett and Multi Index

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Multi Index 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 Multi Index 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 Multi Index 2030 Lifetime, you can compare the effects of market volatilities on Lord Abbett and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Multi Index.

Diversification Opportunities for Lord Abbett and Multi Index

0.59

Correlation Coefficient

Lord Abbett  Multi Index

Very weak diversification

The 3 months correlation between Lord and Multi is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Multi Index 2030 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2030 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2030 has no effect on the direction of Lord Abbett i.e., Lord Abbett and Multi Index go up and down completely randomly.

Pair Corralation between Lord Abbett and Multi Index

Assuming the 90 days horizon Lord Abbett is expected to generate 1.05 times less return on investment than Multi Index. In addition to that, Lord Abbett is 1.0 times more volatile than Multi Index 2030 Lifetime. It trades about 0.08 of its total potential returns per unit of risk. Multi Index 2030 Lifetime is currently generating about 0.08 per unit of volatility. If you would invest  999.00  in Multi Index 2030 Lifetime on September 20, 2024 and sell it today you would earn a total of  244.00  from holding Multi Index 2030 Lifetime or generate 24.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Lord Abbett Convertible  vs.  Multi Index 2030 Lifetime

Lord Abbett Convertible

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 11 (%) 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.

Multi Index 2030

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Index 2030 Lifetime has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Multi Index 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 Multi Index

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

The idea behind Lord Abbett Convertible and Multi Index 2030 Lifetime 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.