Correlation Between American High-income and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both American High-income 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 High-income 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 High Income Municipal and Lord Abbett Intermediate, you can compare the effects of market volatilities on American High-income 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 High-income with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Lord Abbett.
Diversification Opportunities for American High-income and Lord Abbett
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Lord is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Lord Abbett Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Intermediate and American High-income 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 High Income Municipal 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 Intermediate has no effect on the direction of American High-income i.e., American High-income and Lord Abbett go up and down completely randomly.
Pair Corralation between American High-income and Lord Abbett
Assuming the 90 days horizon American High-income is expected to generate 17.67 times less return on investment than Lord Abbett. In addition to that, American High-income is 1.55 times more volatile than Lord Abbett Intermediate. It trades about 0.0 of its total potential returns per unit of risk. Lord Abbett Intermediate is currently generating about 0.03 per unit of volatility. If you would invest 1,023 in Lord Abbett Intermediate on November 5, 2024 and sell it today you would earn a total of 1.00 from holding Lord Abbett Intermediate or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Lord Abbett Intermediate
Performance |
| Timeline |
| American High Income |
| Lord Abbett Intermediate |
American High-income and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Lord Abbett
The main advantage of trading using opposite American High-income and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income 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 High-income vs. Prudential Financial Services | American High-income vs. Gabelli Global Financial | American High-income vs. Ab Government Exchange | American High-income vs. Chestnut Street Exchange |
| Lord Abbett vs. Sp Smallcap 600 | Lord Abbett vs. Kinetics Small Cap | Lord Abbett vs. Oklahoma College Savings | Lord Abbett vs. Lebenthal Lisanti Small |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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