Correlation Between Lord Abbett and Dunham Monthly

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

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

Diversification Opportunities for Lord Abbett and Dunham Monthly

0.53

Correlation Coefficient

Lord Abbett  Dunham Monthly

Very weak diversification

The 3 months correlation between Lord and Dunham is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Ultra and Dunham Monthly Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Monthly Distr 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 Ultra are associated (or correlated) with Dunham Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Monthly Distr has no effect on the direction of Lord Abbett i.e., Lord Abbett and Dunham Monthly go up and down completely randomly.

Pair Corralation between Lord Abbett and Dunham Monthly

Assuming the 90 days horizon Lord Abbett Ultra is not expected to generate positive returns. However, Lord Abbett Ultra is 8.8 times less risky than Dunham Monthly. It waists most of its returns potential to compensate for thr risk taken. Dunham Monthly is generating about -0.02 per unit of risk. If you would invest  1,003  in Lord Abbett Ultra on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Lord Abbett Ultra or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Lord Abbett Ultra  vs.  Dunham Monthly Distribution

Lord Abbett Ultra

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Ultra are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Dunham Monthly Distr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dunham Monthly 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 Dunham Monthly

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

The idea behind Lord Abbett Ultra and Dunham Monthly Distribution 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.