Correlation Between Lord Abbett and Touchstone Focused

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

Diversification Opportunities for Lord Abbett and Touchstone Focused

0.9

Correlation Coefficient

Lord Abbett  Touchstone Focused

Almost no diversification

The 3 months correlation between Lord and Touchstone is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused 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 Touchstone Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Lord Abbett i.e., Lord Abbett and Touchstone Focused go up and down completely randomly.

Pair Corralation between Lord Abbett and Touchstone Focused

Assuming the 90 days horizon Lord Abbett Convertible is expected to under-perform the Touchstone Focused. In addition to that, Lord Abbett is 1.01 times more volatile than Touchstone Focused Fund. It trades about -0.25 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about -0.22 per unit of volatility. If you would invest  7,702  in Touchstone Focused Fund on October 4, 2024 and sell it today you would lose (303.00) from holding Touchstone Focused Fund or give up 3.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Lord Abbett Convertible  vs.  Touchstone Focused Fund

Lord Abbett Convertible

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 5 (%) 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.

Touchstone Focused

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Focused Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone Focused 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 Touchstone Focused

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

The idea behind Lord Abbett Convertible and Touchstone Focused Fund 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.