Correlation Between Spirit Of and Lord Abbett

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

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

Diversification Opportunities for Spirit Of and Lord Abbett

0.37

Correlation Coefficient

Spirit Of  Lord Abbett

Weak diversification

The 3 months correlation between Spirit and Lord is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Of America and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Spirit Of 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 Spirit Of America 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 Short has no effect on the direction of Spirit Of i.e., Spirit Of and Lord Abbett go up and down completely randomly.

Pair Corralation between Spirit Of and Lord Abbett

Assuming the 90 days horizon Spirit Of America is expected to generate 12.04 times more return on investment than Lord Abbett. However, Spirit Of is 12.04 times more volatile than Lord Abbett Short. It trades about 0.09 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.16 per unit of risk. If you would invest  991.00  in Spirit Of America on October 23, 2024 and sell it today you would earn a total of  127.00  from holding Spirit Of America or generate 12.82% return on investment over 90 days.

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

Spirit Of America  vs.  Lord Abbett Short

Spirit Of America

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Of America are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Spirit Of showed solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and 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 Spirit Of and Lord Abbett

The main advantage of trading using opposite Spirit Of and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Of 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 Spirit Of America and Lord Abbett Short 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.