Correlation Between Lord Abbett and Grant Park

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Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Grant Park 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 Grant Park into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Growth and Grant Park Multi, you can compare the effects of market volatilities on Lord Abbett and Grant Park 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 Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Grant Park.

Diversification Opportunities for Lord Abbett and Grant Park

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lord and Grant is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Growth and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi 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 Growth are associated (or correlated) with Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Lord Abbett i.e., Lord Abbett and Grant Park go up and down completely randomly.

Pair Corralation between Lord Abbett and Grant Park

Assuming the 90 days horizon Lord Abbett Growth is expected to generate 3.52 times more return on investment than Grant Park. However, Lord Abbett is 3.52 times more volatile than Grant Park Multi. It trades about 0.1 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.02 per unit of risk. If you would invest  2,594  in Lord Abbett Growth on October 15, 2024 and sell it today you would earn a total of  2,153  from holding Lord Abbett Growth or generate 83.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Lord Abbett Growth  vs.  Grant Park Multi

 Performance 
       Timeline  
Lord Abbett Growth 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Growth are ranked lower than 10 (%) 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.
Grant Park Multi 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Grant Park Multi are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Grant Park is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett and Grant Park Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lord Abbett and Grant Park

The main advantage of trading using opposite Lord Abbett and Grant Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Grant Park 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 Grant Park will offset losses from the drop in Grant Park's long position.
The idea behind Lord Abbett Growth and Grant Park Multi 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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