Correlation Between Lord Abbett and Invesco Select

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

Diversification Opportunities for Lord Abbett and Invesco Select

0.8

Correlation Coefficient

Lord Abbett  Invesco Select

Very poor diversification

The 3 months correlation between Lord and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Invesco Select Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Select Risk 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 Invesco Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Select Risk has no effect on the direction of Lord Abbett i.e., Lord Abbett and Invesco Select go up and down completely randomly.

Pair Corralation between Lord Abbett and Invesco Select

Assuming the 90 days horizon Lord Abbett is expected to generate 3.11 times less return on investment than Invesco Select. In addition to that, Lord Abbett is 5.64 times more volatile than Invesco Select Risk. It trades about 0.0 of its total potential returns per unit of risk. Invesco Select Risk is currently generating about 0.03 per unit of volatility. If you would invest  850.00  in Invesco Select Risk on October 25, 2024 and sell it today you would earn a total of  4.00  from holding Invesco Select Risk or generate 0.47% return on investment over 90 days.

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

Lord Abbett Small  vs.  Invesco Select Risk

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.

Invesco Select Risk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Select Risk are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Invesco Select 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 Invesco Select

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

The idea behind Lord Abbett Small and Invesco Select Risk 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.