Correlation Between Pacific Funds and Lord Abbett

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

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

Diversification Opportunities for Pacific Funds and Lord Abbett

0.07

Correlation Coefficient

Pacific Funds  Lord Abbett

Significant diversification

The 3 months correlation between Pacific and Lord is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Funds Floating and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and Pacific Funds 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 Pacific Funds Floating 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 Health has no effect on the direction of Pacific Funds i.e., Pacific Funds and Lord Abbett go up and down completely randomly.

Pair Corralation between Pacific Funds and Lord Abbett

Assuming the 90 days horizon Pacific Funds Floating is expected to generate 0.06 times more return on investment than Lord Abbett. However, Pacific Funds Floating is 17.53 times less risky than Lord Abbett. It trades about -0.1 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.24 per unit of risk. If you would invest  949.00  in Pacific Funds Floating on October 9, 2024 and sell it today you would lose (1.00) from holding Pacific Funds Floating or give up 0.11% of portfolio value over 90 days.

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

Pacific Funds Floating  vs.  Lord Abbett Health

Pacific Funds Floating

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Pacific Funds and Lord Abbett

The main advantage of trading using opposite Pacific Funds and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds 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 Pacific Funds Floating and Lord Abbett Health 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.