Correlation Between New Economy and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both New Economy 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 New Economy and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Lord Abbett Health, you can compare the effects of market volatilities on New Economy 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 New Economy with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Lord Abbett.
Diversification Opportunities for New Economy and Lord Abbett
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Lord is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and New Economy 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 New Economy Fund 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 Health has no effect on the direction of New Economy i.e., New Economy and Lord Abbett go up and down completely randomly.
Pair Corralation between New Economy and Lord Abbett
Assuming the 90 days horizon New Economy Fund is expected to generate 0.81 times more return on investment than Lord Abbett. However, New Economy Fund is 1.24 times less risky than Lord Abbett. It trades about 0.04 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.01 per unit of risk. If you would invest 6,641 in New Economy Fund on August 27, 2024 and sell it today you would earn a total of 54.00 from holding New Economy Fund or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Lord Abbett Health
Performance |
| Timeline |
| New Economy Fund |
| Lord Abbett Health |
New Economy and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Lord Abbett
The main advantage of trading using opposite New Economy and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy 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.| New Economy vs. Washington Mutual Investors | New Economy vs. American Balanced Fund | New Economy vs. New World Fund | New Economy vs. Europacific Growth Fund |
| Lord Abbett vs. Abr 7525 Volatility | Lord Abbett vs. Rbc Microcap Value | Lord Abbett vs. Materials Portfolio Fidelity | Lord Abbett vs. Falcon Focus Scv |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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