Correlation Between Lord Abbett and Pimco Flexible

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Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Pimco Flexible 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 Pimco Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Short and Pimco Flexible Municipal, you can compare the effects of market volatilities on Lord Abbett and Pimco Flexible 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 Pimco Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Pimco Flexible.

Diversification Opportunities for Lord Abbett and Pimco Flexible

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Lord and Pimco is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Short and Pimco Flexible Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Flexible Municipal 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 Short are associated (or correlated) with Pimco Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Flexible Municipal has no effect on the direction of Lord Abbett i.e., Lord Abbett and Pimco Flexible go up and down completely randomly.

Pair Corralation between Lord Abbett and Pimco Flexible

Assuming the 90 days horizon Lord Abbett Short is expected to generate 0.78 times more return on investment than Pimco Flexible. However, Lord Abbett Short is 1.28 times less risky than Pimco Flexible. It trades about 0.18 of its potential returns per unit of risk. Pimco Flexible Municipal is currently generating about 0.05 per unit of risk. If you would invest  795.00  in Lord Abbett Short on October 25, 2024 and sell it today you would earn a total of  195.00  from holding Lord Abbett Short or generate 24.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lord Abbett Short  vs.  Pimco Flexible Municipal

 Performance 
       Timeline  
Lord Abbett Short 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. 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.
Pimco Flexible Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco Flexible Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett and Pimco Flexible Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lord Abbett and Pimco Flexible

The main advantage of trading using opposite Lord Abbett and Pimco Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Pimco Flexible 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 Pimco Flexible will offset losses from the drop in Pimco Flexible's long position.
The idea behind Lord Abbett Short and Pimco Flexible Municipal 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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