Correlation Between Lord Abbett and Kinetics Small

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

Diversification Opportunities for Lord Abbett and Kinetics Small

0.67

Correlation Coefficient

Lord Abbett  Kinetics Small

Poor diversification

The 3 months correlation between Lord and Kinetics is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Ultra and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Lord Abbett i.e., Lord Abbett and Kinetics Small go up and down completely randomly.

Pair Corralation between Lord Abbett and Kinetics Small

Assuming the 90 days horizon Lord Abbett Ultra is not expected to generate positive returns. However, Lord Abbett Ultra is 80.88 times less risky than Kinetics Small. It waists most of its returns potential to compensate for thr risk taken. Kinetics Small is generating about -0.42 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	Significant
Accuracy	95.45%
Values	Daily Returns

Lord Abbett Ultra  vs.  Kinetics Small Cap

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.

Kinetics Small Cap

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lord Abbett and Kinetics Small

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

The idea behind Lord Abbett Ultra and Kinetics Small Cap 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.