Correlation Between Lord Abbett and Dreyfus International

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

Diversification Opportunities for Lord Abbett and Dreyfus International

0.24

Correlation Coefficient

Lord Abbett  Dreyfus International

Modest diversification

The 3 months correlation between Lord and Dreyfus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Dreyfus International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International 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 Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Lord Abbett i.e., Lord Abbett and Dreyfus International go up and down completely randomly.

Pair Corralation between Lord Abbett and Dreyfus International

Assuming the 90 days horizon Lord Abbett is expected to generate 1.58 times less return on investment than Dreyfus International. In addition to that, Lord Abbett is 1.22 times more volatile than Dreyfus International Stock. It trades about 0.13 of its total potential returns per unit of risk. Dreyfus International Stock is currently generating about 0.25 per unit of volatility. If you would invest  1,905  in Dreyfus International Stock on October 23, 2024 and sell it today you would earn a total of  67.00  from holding Dreyfus International Stock or generate 3.52% return on investment over 90 days.

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

Lord Abbett Small  vs.  Dreyfus International Stock

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.

Dreyfus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dreyfus International 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 Dreyfus International

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

The idea behind Lord Abbett Small and Dreyfus International Stock 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.