Correlation Between Oil Equipment and Lord Abbett

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

By analyzing existing cross correlation between Oil Equipment Services and Lord Abbett Convertible, you can compare the effects of market volatilities on Oil Equipment and Lord Abbett 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 Oil Equipment with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Equipment and Lord Abbett.

Diversification Opportunities for Oil Equipment and Lord Abbett

0.3

Correlation Coefficient

Oil Equipment  Lord Abbett

Weak diversification

The 3 months correlation between Oil and Lord is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oil Equipment Services and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Oil Equipment 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 Oil Equipment Services are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Convertible has no effect on the direction of Oil Equipment i.e., Oil Equipment and Lord Abbett go up and down completely randomly.

Pair Corralation between Oil Equipment and Lord Abbett

Assuming the 90 days horizon Oil Equipment is expected to generate 4.35 times less return on investment than Lord Abbett. In addition to that, Oil Equipment is 5.42 times more volatile than Lord Abbett Convertible. It trades about 0.0 of its total potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.09 per unit of volatility. If you would invest  1,175  in Lord Abbett Convertible on September 16, 2024 and sell it today you would earn a total of  307.00  from holding Lord Abbett Convertible or generate 26.13% return on investment over 90 days.

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

Oil Equipment Services  vs.  Lord Abbett Convertible

Oil Equipment Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Equipment Services has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Oil Equipment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Convertible

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oil Equipment and Lord Abbett

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

The idea behind Oil Equipment Services and Lord Abbett Convertible 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.