Correlation Between Lord Abbett and Icon Information

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

By analyzing existing cross correlation between Lord Abbett Health and Icon Information Technology, you can compare the effects of market volatilities on Lord Abbett and Icon Information 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 Icon Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Icon Information.

Diversification Opportunities for Lord Abbett and Icon Information

0.2

Correlation Coefficient

Lord Abbett  Icon Information

Modest diversification

The 3 months correlation between Lord and Icon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Icon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Information Tec 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 Health are associated (or correlated) with Icon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Information Tec has no effect on the direction of Lord Abbett i.e., Lord Abbett and Icon Information go up and down completely randomly.

Pair Corralation between Lord Abbett and Icon Information

Assuming the 90 days horizon Lord Abbett Health is expected to generate 0.78 times more return on investment than Icon Information. However, Lord Abbett Health is 1.28 times less risky than Icon Information. It trades about -0.04 of its potential returns per unit of risk. Icon Information Technology is currently generating about -0.12 per unit of risk. If you would invest  1,931  in Lord Abbett Health on September 15, 2024 and sell it today you would lose (18.00) from holding Lord Abbett Health or give up 0.93% of portfolio value over 90 days.

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

Lord Abbett Health  vs.  Icon Information Technology

Lord Abbett Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Information Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Information Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Icon Information 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 Icon Information

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

The idea behind Lord Abbett Health and Icon Information Technology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..