Correlation Between Lord Abbett and Deutsche Large

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

Diversification Opportunities for Lord Abbett and Deutsche Large

-0.38

Correlation Coefficient

Lord Abbett  Deutsche Large

Very good diversification

The 3 months correlation between Lord and Deutsche is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Deutsche Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Large Cap 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 Deutsche Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Large Cap has no effect on the direction of Lord Abbett i.e., Lord Abbett and Deutsche Large go up and down completely randomly.

Pair Corralation between Lord Abbett and Deutsche Large

Assuming the 90 days horizon Lord Abbett Inflation is expected to under-perform the Deutsche Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Inflation is 7.19 times less risky than Deutsche Large. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Deutsche Large Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,176  in Deutsche Large Cap on October 8, 2024 and sell it today you would earn a total of  716.00  from holding Deutsche Large Cap or generate 8.76% return on investment over 90 days.

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

Lord Abbett Inflation  vs.  Deutsche Large Cap

Lord Abbett Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Inflation has generated negative risk-adjusted returns adding no value to fund investors. 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.

Deutsche Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Large Cap 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, Deutsche Large may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lord Abbett and Deutsche Large

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

The idea behind Lord Abbett Inflation and Deutsche Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.