Correlation Between Applied Finance and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Applied Finance 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 Applied Finance and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Lord Abbett Small, you can compare the effects of market volatilities on Applied Finance 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 Applied Finance with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Lord Abbett.
Diversification Opportunities for Applied Finance and Lord Abbett
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and Lord is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Applied Finance 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 Applied Finance Explorer 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 Small has no effect on the direction of Applied Finance i.e., Applied Finance and Lord Abbett go up and down completely randomly.
Pair Corralation between Applied Finance and Lord Abbett
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.29 times more return on investment than Lord Abbett. However, Applied Finance is 1.29 times more volatile than Lord Abbett Small. It trades about 0.05 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.06 per unit of risk. If you would invest 1,737 in Applied Finance Explorer on August 24, 2024 and sell it today you would earn a total of 641.00 from holding Applied Finance Explorer or generate 36.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Lord Abbett Small
Performance |
| Timeline |
| Applied Finance Explorer |
| Lord Abbett Small |
Applied Finance and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Lord Abbett
The main advantage of trading using opposite Applied Finance and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance 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.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Lord Abbett vs. American Century Etf | Lord Abbett vs. Valic Company I | Lord Abbett vs. Northern Small Cap | Lord Abbett vs. Columbia Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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