Correlation Between Pimco All and Lord Abbett

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

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

Diversification Opportunities for Pimco All and Lord Abbett

0.67

Correlation Coefficient

Pimco All  Lord Abbett

Poor diversification

The 3 months correlation between Pimco and Lord is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset 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 Pimco All 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 Pimco All Asset 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 Pimco All i.e., Pimco All and Lord Abbett go up and down completely randomly.

Pair Corralation between Pimco All and Lord Abbett

Assuming the 90 days horizon Pimco All Asset is expected to generate 0.46 times more return on investment than Lord Abbett. However, Pimco All Asset is 2.2 times less risky than Lord Abbett. It trades about 0.25 of its potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.06 per unit of risk. If you would invest  1,071  in Pimco All Asset on December 2, 2024 and sell it today you would earn a total of  35.00  from holding Pimco All Asset or generate 3.27% return on investment over 90 days.

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

Pimco All Asset  vs.  Lord Abbett Convertible

Pimco All Asset

Risk-Adjusted Performance

Weak

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

Very Weak

Over the last 90 days Lord Abbett Convertible 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.

Pair Trading with Pimco All and Lord Abbett

The main advantage of trading using opposite Pimco All and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All 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 Pimco All Asset 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.