Correlation Between Sterling Capital and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Sterling Capital 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 Sterling Capital and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Capital Short and Lord Abbett Focused, you can compare the effects of market volatilities on Sterling Capital 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 Sterling Capital with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Capital and Lord Abbett.
Diversification Opportunities for Sterling Capital and Lord Abbett
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sterling and Lord is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Capital Short 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 Sterling Capital 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 Sterling Capital Short 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 Sterling Capital i.e., Sterling Capital and Lord Abbett go up and down completely randomly.
Pair Corralation between Sterling Capital and Lord Abbett
Assuming the 90 days horizon Sterling Capital is expected to generate 1.11 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Sterling Capital Short is 8.56 times less risky than Lord Abbett. It trades about 0.15 of its potential returns per unit of risk. Lord Abbett Focused is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,538 in Lord Abbett Focused on November 28, 2024 and sell it today you would earn a total of 214.00 from holding Lord Abbett Focused or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Capital Short vs. Lord Abbett Focused
Performance |
| Timeline |
| Sterling Capital Short |
| Lord Abbett Focused |
Sterling Capital and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Capital and Lord Abbett
The main advantage of trading using opposite Sterling Capital and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Capital 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.| Sterling Capital vs. Hartford Moderate Allocation | Sterling Capital vs. American Funds Retirement | Sterling Capital vs. Wealthbuilder Moderate Balanced | Sterling Capital vs. Voya Retirement Growth |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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