Correlation Between First Eagle and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both First Eagle 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 First Eagle and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Eagle Small and Lord Abbett High, you can compare the effects of market volatilities on First Eagle 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 First Eagle with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Lord Abbett.
Diversification Opportunities for First Eagle and Lord Abbett
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Lord is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Small and Lord Abbett High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett High and First Eagle 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 First Eagle Small 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 High has no effect on the direction of First Eagle i.e., First Eagle and Lord Abbett go up and down completely randomly.
Pair Corralation between First Eagle and Lord Abbett
Assuming the 90 days horizon First Eagle Small is expected to generate 1.82 times more return on investment than Lord Abbett. However, First Eagle is 1.82 times more volatile than Lord Abbett High. It trades about 0.05 of its potential returns per unit of risk. Lord Abbett High is currently generating about 0.05 per unit of risk. If you would invest 866.00 in First Eagle Small on September 4, 2024 and sell it today you would earn a total of 277.00 from holding First Eagle Small or generate 31.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Eagle Small vs. Lord Abbett High
Performance |
| Timeline |
| First Eagle Small |
| Lord Abbett High |
First Eagle and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Lord Abbett
The main advantage of trading using opposite First Eagle and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle 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.| First Eagle vs. Vanguard Windsor Fund | First Eagle vs. Fundamental Large Cap | First Eagle vs. Fidelity Series 1000 | First Eagle vs. Vela Large Cap |
| Lord Abbett vs. Clearbridge Energy Mlp | Lord Abbett vs. World Energy Fund | Lord Abbett vs. Hennessy Bp Energy | Lord Abbett vs. Oil Gas Ultrasector |
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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