Correlation Between Ab Municipal and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Ab Municipal 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 Ab Municipal and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Lord Abbett Inflation, you can compare the effects of market volatilities on Ab Municipal 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 Ab Municipal with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Lord Abbett.
Diversification Opportunities for Ab Municipal and Lord Abbett
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AUNCX and Lord is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond 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 Ab Municipal 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 Ab Municipal Bond 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 Ab Municipal i.e., Ab Municipal and Lord Abbett go up and down completely randomly.
Pair Corralation between Ab Municipal and Lord Abbett
Assuming the 90 days horizon Ab Municipal is expected to generate 1.17 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Ab Municipal Bond is 1.22 times less risky than Lord Abbett. It trades about 0.14 of its potential returns per unit of risk. Lord Abbett Inflation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,091 in Lord Abbett Inflation on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Lord Abbett Inflation or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Ab Municipal Bond vs. Lord Abbett Inflation
Performance |
| Timeline |
| Ab Municipal Bond |
| Lord Abbett Inflation |
Ab Municipal and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Lord Abbett
The main advantage of trading using opposite Ab Municipal and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal 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.| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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