Correlation Between Sit Government and Lord Abbett

Can any of the company-specific risk be diversified away by investing in both Sit 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 Sit 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 Sit Government Securities and Lord Abbett Trust, you can compare the effects of market volatilities on Sit 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 Sit Government with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Lord Abbett.

Diversification Opportunities for Sit Government and Lord Abbett

0.47

Correlation Coefficient

Sit Government  Lord Abbett

Very weak diversification

The 3 months correlation between Sit and Lord is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Lord Abbett Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Trust and Sit 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 Sit Government Securities 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 Trust has no effect on the direction of Sit Government i.e., Sit Government and Lord Abbett go up and down completely randomly.

Pair Corralation between Sit Government and Lord Abbett

Assuming the 90 days horizon Sit Government is expected to generate 3.53 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Sit Government Securities is 3.14 times less risky than Lord Abbett. It trades about 0.04 of its potential returns per unit of risk. Lord Abbett Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,296  in Lord Abbett Trust on September 22, 2024 and sell it today you would earn a total of  268.00  from holding Lord Abbett Trust or generate 20.68% return on investment over 90 days.

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

Sit Government Securities  vs.  Lord Abbett Trust

Sit Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lord Abbett Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Trust has generated negative risk-adjusted returns adding no value to fund investors. 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 Sit Government and Lord Abbett

The main advantage of trading using opposite Sit Government and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit 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 Sit Government Securities and Lord Abbett Trust 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.