Correlation Between Short Duration and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Short Duration 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 Short Duration and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and Lord Abbett Inflation, you can compare the effects of market volatilities on Short Duration 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 Short Duration with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Lord Abbett.
Diversification Opportunities for Short Duration and Lord Abbett
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Short and Lord is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Lord Abbett Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Inflation and Short Duration 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 Short Duration Inflation 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 Inflation has no effect on the direction of Short Duration i.e., Short Duration and Lord Abbett go up and down completely randomly.
Pair Corralation between Short Duration and Lord Abbett
Assuming the 90 days horizon Short Duration is expected to generate 2.71 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Short Duration Inflation is 1.26 times less risky than Lord Abbett. It trades about 0.08 of its potential returns per unit of risk. Lord Abbett Inflation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,157 in Lord Abbett Inflation on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Lord Abbett Inflation or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. Lord Abbett Inflation
Performance |
| Timeline |
| Short Duration Inflation |
| Lord Abbett Inflation |
Short Duration and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and Lord Abbett
The main advantage of trading using opposite Short Duration and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration 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.| Short Duration vs. Inflation Adjusted Bond Fund | Short Duration vs. Diversified Bond Fund | Short Duration vs. Short Duration Fund | Short Duration vs. Core Plus Fund |
| Lord Abbett vs. M3sixty Capital Small | Lord Abbett vs. Nationwide Small Cap | Lord Abbett vs. Champlain Small | Lord Abbett vs. Chartwell 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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