Correlation Between Red Oak and Lord Abbett

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

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

Diversification Opportunities for Red Oak and Lord Abbett

-0.52

Correlation Coefficient

Red Oak  Lord Abbett

Excellent diversification

The 3 months correlation between Red and Lord is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Lord Abbett International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett International and Red Oak 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 Red Oak Technology 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 International has no effect on the direction of Red Oak i.e., Red Oak and Lord Abbett go up and down completely randomly.

Pair Corralation between Red Oak and Lord Abbett

Assuming the 90 days horizon Red Oak Technology is expected to under-perform the Lord Abbett. In addition to that, Red Oak is 1.87 times more volatile than Lord Abbett International. It trades about -0.13 of its total potential returns per unit of risk. Lord Abbett International is currently generating about 0.22 per unit of volatility. If you would invest  796.00  in Lord Abbett International on December 17, 2024 and sell it today you would earn a total of  97.00  from holding Lord Abbett International or generate 12.19% return on investment over 90 days.

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

Red Oak Technology  vs.  Lord Abbett International

Red Oak Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Oak Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Lord Abbett International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett International are ranked lower than 17 (%) 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 April 2025.

Pair Trading with Red Oak and Lord Abbett

The main advantage of trading using opposite Red Oak and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Oak 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 Red Oak Technology and Lord Abbett International 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.