Correlation Between Lord Abbett and Angel Oak

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

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

Diversification Opportunities for Lord Abbett and Angel Oak

0.38

Correlation Coefficient

Lord Abbett  Angel Oak

Weak diversification

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

Pair Corralation between Lord Abbett and Angel Oak

Assuming the 90 days horizon Lord Abbett Intermediate is expected to under-perform the Angel Oak. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Intermediate is 1.01 times less risky than Angel Oak. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Angel Oak Financial is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,415  in Angel Oak Financial on October 10, 2024 and sell it today you would lose (5.00) from holding Angel Oak Financial or give up 0.35% 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 Intermediate  vs.  Angel Oak Financial

Lord Abbett Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Intermediate 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.

Angel Oak Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Angel Oak Financial are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Angel Oak 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 Angel Oak

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

The idea behind Lord Abbett Intermediate and Angel Oak Financial 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.