Correlation Between Lord Abbett and Fidelity Disciplined

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

Diversification Opportunities for Lord Abbett and Fidelity Disciplined

0.02

Correlation Coefficient

Lord Abbett  Fidelity Disciplined

Significant diversification

The 3 months correlation between Lord and Fidelity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Growth and Fidelity Disciplined Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Disciplined 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 Fidelity Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Disciplined has no effect on the direction of Lord Abbett i.e., Lord Abbett and Fidelity Disciplined go up and down completely randomly.

Pair Corralation between Lord Abbett and Fidelity Disciplined

Assuming the 90 days horizon Lord Abbett Growth is expected to generate 1.3 times more return on investment than Fidelity Disciplined. However, Lord Abbett is 1.3 times more volatile than Fidelity Disciplined Equity. It trades about 0.1 of its potential returns per unit of risk. Fidelity Disciplined Equity is currently generating about 0.07 per unit of risk. If you would invest  2,643  in Lord Abbett Growth on October 11, 2024 and sell it today you would earn a total of  2,374  from holding Lord Abbett Growth or generate 89.82% return on investment over 90 days.

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

Lord Abbett Growth  vs.  Fidelity Disciplined Equity

Lord Abbett Growth

Risk-Adjusted Performance

10 of 100

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 technical and fundamental indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Disciplined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Disciplined Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Fidelity Disciplined 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 Fidelity Disciplined

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

The idea behind Lord Abbett Growth and Fidelity Disciplined Equity 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.