Correlation Between Virtus High and Lord Abbett

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

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

Diversification Opportunities for Virtus High and Lord Abbett

0.98

Correlation Coefficient

Virtus High  Lord Abbett

Almost no diversification

The 3 months correlation between Virtus and Lord is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Virtus High Yield 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 Virtus High 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 Virtus High Yield 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 Virtus High i.e., Virtus High and Lord Abbett go up and down completely randomly.

Pair Corralation between Virtus High and Lord Abbett

Assuming the 90 days horizon Virtus High is expected to generate 1.23 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Virtus High Yield is 1.01 times less risky than Lord Abbett. It trades about 0.12 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  966.00  in Lord Abbett Short on October 24, 2024 and sell it today you would earn a total of  25.00  from holding Lord Abbett Short or generate 2.59% return on investment over 90 days.

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

Virtus High Yield  vs.  Lord Abbett Short

Virtus High Yield

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus High Yield are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus High 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 13 (%) 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 Virtus High and Lord Abbett

The main advantage of trading using opposite Virtus High and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus High 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 Virtus High Yield 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.