Correlation Between American Century and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both American Century 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 American Century and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Global and Lord Abbett Global, you can compare the effects of market volatilities on American Century 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 American Century with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Lord Abbett.
Diversification Opportunities for American Century and Lord Abbett
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Lord is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American Century Global 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 American Century 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 American Century Global 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 American Century i.e., American Century and Lord Abbett go up and down completely randomly.
Pair Corralation between American Century and Lord Abbett
Assuming the 90 days horizon American Century Global is expected to generate 1.22 times more return on investment than Lord Abbett. However, American Century is 1.22 times more volatile than Lord Abbett Global. It trades about 0.08 of its potential returns per unit of risk. Lord Abbett Global is currently generating about 0.07 per unit of risk. If you would invest 1,411 in American Century Global on August 29, 2024 and sell it today you would earn a total of 21.00 from holding American Century Global or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Global vs. Lord Abbett Global
Performance |
| Timeline |
| American Century Global |
| Lord Abbett Global |
American Century and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Lord Abbett
The main advantage of trading using opposite American Century and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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.| American Century vs. HUMANA INC | American Century vs. Aquagold International | American Century vs. Barloworld Ltd ADR | American Century vs. Morningstar Unconstrained Allocation |
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Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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