Correlation Between Lord Abbett and Loomis Sayles

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

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

Diversification Opportunities for Lord Abbett and Loomis Sayles

0.79

Correlation Coefficient

Lord Abbett  Loomis Sayles

Poor diversification

The 3 months correlation between Lord and Loomis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Loomis Sayles Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Limited 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 Inflation are associated (or correlated) with Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Limited has no effect on the direction of Lord Abbett i.e., Lord Abbett and Loomis Sayles go up and down completely randomly.

Pair Corralation between Lord Abbett and Loomis Sayles

Assuming the 90 days horizon Lord Abbett Inflation is expected to generate 0.81 times more return on investment than Loomis Sayles. However, Lord Abbett Inflation is 1.24 times less risky than Loomis Sayles. It trades about 0.39 of its potential returns per unit of risk. Loomis Sayles Limited is currently generating about 0.17 per unit of risk. If you would invest  1,153  in Lord Abbett Inflation on October 25, 2024 and sell it today you would earn a total of  10.00  from holding Lord Abbett Inflation or generate 0.87% return on investment over 90 days.

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

Lord Abbett Inflation  vs.  Loomis Sayles Limited

Lord Abbett Inflation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Inflation are ranked lower than 9 (%) 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.

Loomis Sayles Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis Sayles Limited are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Loomis Sayles 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 Loomis Sayles

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

The idea behind Lord Abbett Inflation and Loomis Sayles Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.