Correlation Between Ultramid Cap and Lord Abbett

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

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

Diversification Opportunities for Ultramid Cap and Lord Abbett

0.62

Correlation Coefficient

Ultramid Cap  Lord Abbett

Poor diversification

The 3 months correlation between Ultramid and Lord is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ultramid Cap Profund Ultramid 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 Ultramid Cap 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 Ultramid Cap Profund Ultramid 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 Short has no effect on the direction of Ultramid Cap i.e., Ultramid Cap and Lord Abbett go up and down completely randomly.

Pair Corralation between Ultramid Cap and Lord Abbett

Assuming the 90 days horizon Ultramid Cap Profund Ultramid Cap is expected to under-perform the Lord Abbett. In addition to that, Ultramid Cap is 20.66 times more volatile than Lord Abbett Short. It trades about -0.26 of its total potential returns per unit of risk. Lord Abbett Short is currently generating about -0.13 per unit of volatility. If you would invest  388.00  in Lord Abbett Short on October 8, 2024 and sell it today you would lose (1.00) from holding Lord Abbett Short or give up 0.26% of portfolio value over 90 days.

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

Ultramid Cap Profund Ultramid   vs.  Lord Abbett Short

Ultramid Cap Profund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ultramid Cap Profund Ultramid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ultramid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Short 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 Ultramid Cap and Lord Abbett

The main advantage of trading using opposite Ultramid Cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultramid Cap 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 Ultramid Cap Profund Ultramid Cap 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.