Correlation Between Lord Abbett and Horizon Us

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

By analyzing existing cross correlation between Lord Abbett Diversified and Horizon Defensive Smmd, you can compare the effects of market volatilities on Lord Abbett and Horizon Us 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 Horizon Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Horizon Us.

Diversification Opportunities for Lord Abbett and Horizon Us

0.88

Correlation Coefficient

Lord Abbett  Horizon Us

Very poor diversification

The 3 months correlation between Lord and Horizon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Horizon Defensive Smmd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Smmd 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 Diversified are associated (or correlated) with Horizon Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Smmd has no effect on the direction of Lord Abbett i.e., Lord Abbett and Horizon Us go up and down completely randomly.

Pair Corralation between Lord Abbett and Horizon Us

Assuming the 90 days horizon Lord Abbett Diversified is expected to under-perform the Horizon Us. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Diversified is 2.89 times less risky than Horizon Us. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Horizon Defensive Smmd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,666  in Horizon Defensive Smmd on October 7, 2024 and sell it today you would earn a total of  27.00  from holding Horizon Defensive Smmd or generate 0.74% return on investment over 90 days.

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

Lord Abbett Diversified  vs.  Horizon Defensive Smmd

Lord Abbett Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and 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.

Horizon Defensive Smmd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Defensive Smmd are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Us 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 Horizon Us

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

The idea behind Lord Abbett Diversified and Horizon Defensive Smmd 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..