Correlation Between Prudential Government and Lord Abbett

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

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

Diversification Opportunities for Prudential Government and Lord Abbett

0.0

Correlation Coefficient

Prudential Government  Lord Abbett

Pay attention - limited upside

The 3 months correlation between Prudential and Lord is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Government Money and Lord Abbett Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Focused and Prudential Government 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 Prudential Government Money 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 Focused has no effect on the direction of Prudential Government i.e., Prudential Government and Lord Abbett go up and down completely randomly.

Pair Corralation between Prudential Government and Lord Abbett

Assuming the 90 days horizon Prudential Government is expected to generate 2.38 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Prudential Government Money is 9.86 times less risky than Lord Abbett. It trades about 0.12 of its potential returns per unit of risk. Lord Abbett Focused is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,243  in Lord Abbett Focused on December 2, 2024 and sell it today you would earn a total of  343.00  from holding Lord Abbett Focused or generate 15.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.36%
Values	Daily Returns

Prudential Government Money  vs.  Lord Abbett Focused

Prudential Government

Risk-Adjusted Performance

Very Weak

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

Lord Abbett Focused

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Prudential Government and Lord Abbett

The main advantage of trading using opposite Prudential Government and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Government 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 Prudential Government Money and Lord Abbett Focused 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..