Correlation Between Omni Small-cap and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Omni Small-cap 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 Omni Small-cap and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omni Small Cap Value and Lord Abbett Focused, you can compare the effects of market volatilities on Omni Small-cap 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 Omni Small-cap with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omni Small-cap and Lord Abbett.
Diversification Opportunities for Omni Small-cap and Lord Abbett
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Omni and Lord is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Lord Abbett Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Focused and Omni Small-cap 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 Omni Small Cap Value 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 Focused has no effect on the direction of Omni Small-cap i.e., Omni Small-cap and Lord Abbett go up and down completely randomly.
Pair Corralation between Omni Small-cap and Lord Abbett
Assuming the 90 days horizon Omni Small Cap Value is expected to generate 1.14 times more return on investment than Lord Abbett. However, Omni Small-cap is 1.14 times more volatile than Lord Abbett Focused. It trades about 0.04 of its potential returns per unit of risk. Lord Abbett Focused is currently generating about 0.03 per unit of risk. If you would invest 1,700 in Omni Small Cap Value on September 1, 2024 and sell it today you would earn a total of 437.00 from holding Omni Small Cap Value or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Omni Small Cap Value vs. Lord Abbett Focused
Performance |
| Timeline |
| Omni Small Cap |
| Lord Abbett Focused |
Omni Small-cap and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Omni Small-cap and Lord Abbett
The main advantage of trading using opposite Omni Small-cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omni Small-cap 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.| Omni Small-cap vs. Cref Inflation Linked Bond | Omni Small-cap vs. Ab Bond Inflation | Omni Small-cap vs. Ab Bond Inflation | Omni Small-cap vs. Ab Bond Inflation |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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