Correlation Between Lord Abbett and Multi-manager High

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Multi-manager High 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-manager High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lord Abbett Focused and Multi Manager High Yield, you can compare the effects of market volatilities on Lord Abbett and Multi-manager High 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-manager High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Multi-manager High.

Diversification Opportunities for Lord Abbett and Multi-manager High

0.4

Correlation Coefficient

Lord Abbett  Multi-manager High

Very weak diversification

The 3 months correlation between Lord and Multi-manager is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Focused and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High 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 Focused are associated (or correlated) with Multi-manager High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of Lord Abbett i.e., Lord Abbett and Multi-manager High go up and down completely randomly.

Pair Corralation between Lord Abbett and Multi-manager High

Assuming the 90 days horizon Lord Abbett Focused is expected to generate 4.5 times more return on investment than Multi-manager High. However, Lord Abbett is 4.5 times more volatile than Multi Manager High Yield. It trades about 0.03 of its potential returns per unit of risk. Multi Manager High Yield is currently generating about -0.22 per unit of risk. If you would invest  3,669  in Lord Abbett Focused on October 9, 2024 and sell it today you would earn a total of  22.00  from holding Lord Abbett Focused or generate 0.6% return on investment over 90 days.

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

Lord Abbett Focused  vs.  Multi Manager High Yield

Lord Abbett Focused

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Focused are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Multi Manager High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Manager High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multi-manager High 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-manager High

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

The idea behind Lord Abbett Focused and Multi Manager High Yield 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.