Correlation Between Lord Abbett and Credit Suisse

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

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

Diversification Opportunities for Lord Abbett and Credit Suisse

-0.23

Correlation Coefficient

Lord Abbett  Credit Suisse

Very good diversification

The 3 months correlation between Lord and Credit is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity 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 Small are associated (or correlated) with Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Modity has no effect on the direction of Lord Abbett i.e., Lord Abbett and Credit Suisse go up and down completely randomly.

Pair Corralation between Lord Abbett and Credit Suisse

Assuming the 90 days horizon Lord Abbett Small is expected to under-perform the Credit Suisse. In addition to that, Lord Abbett is 2.9 times more volatile than Credit Suisse Modity. It trades about -0.09 of its total potential returns per unit of risk. Credit Suisse Modity is currently generating about -0.02 per unit of volatility. If you would invest  2,265  in Credit Suisse Modity on October 6, 2024 and sell it today you would lose (13.00) from holding Credit Suisse Modity or give up 0.57% of portfolio value over 90 days.

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

Lord Abbett Small  vs.  Credit Suisse Modity

Lord Abbett Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Small 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.

Credit Suisse Modity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Suisse Modity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Credit Suisse 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 Credit Suisse

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

The idea behind Lord Abbett Small and Credit Suisse Modity 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.