Correlation Between Ishares Municipal and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Ishares 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 Ishares 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 Ishares Municipal Bond and Lord Abbett International, you can compare the effects of market volatilities on Ishares 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 Ishares Municipal with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Lord Abbett.
Diversification Opportunities for Ishares Municipal and Lord Abbett
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ishares and Lord is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Lord Abbett International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett International and Ishares 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 Ishares 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 International has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Lord Abbett go up and down completely randomly.
Pair Corralation between Ishares Municipal and Lord Abbett
Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.39 times more return on investment than Lord Abbett. However, Ishares Municipal Bond is 2.59 times less risky than Lord Abbett. It trades about 0.23 of its potential returns per unit of risk. Lord Abbett International is currently generating about -0.06 per unit of risk. If you would invest 1,098 in Ishares Municipal Bond on August 31, 2024 and sell it today you would earn a total of 17.00 from holding Ishares Municipal Bond or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Lord Abbett International
Performance |
| Timeline |
| Ishares Municipal Bond |
| Lord Abbett International |
Ishares Municipal and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Lord Abbett
The main advantage of trading using opposite Ishares Municipal and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares 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.| Ishares Municipal vs. Allianzgi Technology Fund | Ishares Municipal vs. Goldman Sachs Technology | Ishares Municipal vs. Janus Global Technology | Ishares Municipal vs. Goldman Sachs Technology |
| Lord Abbett vs. Ab Impact Municipal | Lord Abbett vs. Ishares Municipal Bond | Lord Abbett vs. California High Yield Municipal | Lord Abbett vs. Morningstar Municipal Bond |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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