Correlation Between Touchstone Small and Lord Abbett

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Can any of the company-specific risk be diversified away by investing in both Touchstone Small 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 Touchstone Small and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Lord Abbett Global, you can compare the effects of market volatilities on Touchstone Small 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 Touchstone Small with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Lord Abbett.

Diversification Opportunities for Touchstone Small and Lord Abbett

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Touchstone and Lord is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap and Lord Abbett Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Global and Touchstone Small 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 Touchstone Small Cap 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 Global has no effect on the direction of Touchstone Small i.e., Touchstone Small and Lord Abbett go up and down completely randomly.

Pair Corralation between Touchstone Small and Lord Abbett

Assuming the 90 days horizon Touchstone Small Cap is expected to generate 1.58 times more return on investment than Lord Abbett. However, Touchstone Small is 1.58 times more volatile than Lord Abbett Global. It trades about 0.19 of its potential returns per unit of risk. Lord Abbett Global is currently generating about 0.22 per unit of risk. If you would invest  3,654  in Touchstone Small Cap on September 6, 2024 and sell it today you would earn a total of  503.00  from holding Touchstone Small Cap or generate 13.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Touchstone Small Cap  vs.  Lord Abbett Global

 Performance 
       Timeline  
Touchstone Small Cap 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Small showed solid returns over the last few months and may actually be approaching a breakup point.
Lord Abbett Global 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Global 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 January 2025.

Touchstone Small and Lord Abbett Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Touchstone Small and Lord Abbett

The main advantage of trading using opposite Touchstone Small and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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 Touchstone Small Cap and Lord Abbett Global 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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