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 Small, 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
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Lord is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal 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 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 Small 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 Municipal is expected to generate 0.17 times more return on investment than Lord Abbett. However, American High Income Municipal is 5.99 times less risky than Lord Abbett. It trades about -0.09 of its potential returns per unit of risk. Lord Abbett Small is currently generating about -0.19 per unit of risk. If you would invest 1,540 in American High Income Municipal on October 27, 2024 and sell it today you would lose (16.00) from holding American High Income Municipal or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Lord Abbett Small
Performance |
| Timeline |
| American High Income |
| Lord Abbett Small |
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. Vanguard Small Cap Value | American High-income vs. William Blair Small | American High-income vs. Lord Abbett Small | American High-income vs. American Century Etf |
| Lord Abbett vs. Prudential High Yield | Lord Abbett vs. Artisan High Income | Lord Abbett vs. Virtus High Yield | Lord Abbett vs. Millerhoward High Income |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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