Correlation Between Federated Floating and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Floating 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 Federated Floating and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Floating Rate and Lord Abbett Diversified, you can compare the effects of market volatilities on Federated Floating 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 Federated Floating with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Floating and Lord Abbett.
Diversification Opportunities for Federated Floating and Lord Abbett
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Lord is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Federated Floating Rate and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified and Federated Floating 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 Federated Floating Rate 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 Diversified has no effect on the direction of Federated Floating i.e., Federated Floating and Lord Abbett go up and down completely randomly.
Pair Corralation between Federated Floating and Lord Abbett
Assuming the 90 days horizon Federated Floating is expected to generate 1.28 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Federated Floating Rate is 2.33 times less risky than Lord Abbett. It trades about 0.2 of its potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,359 in Lord Abbett Diversified on August 30, 2024 and sell it today you would earn a total of 286.00 from holding Lord Abbett Diversified or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Floating Rate vs. Lord Abbett Diversified
Performance |
| Timeline |
| Federated Floating Rate |
| Lord Abbett Diversified |
Federated Floating and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Floating and Lord Abbett
The main advantage of trading using opposite Federated Floating and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Floating 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.| Federated Floating vs. Icon Natural Resources | Federated Floating vs. Alpsalerian Energy Infrastructure | Federated Floating vs. Gmo Resources | Federated Floating vs. Dreyfus Natural Resources |
| Lord Abbett vs. Guggenheim Diversified Income | Lord Abbett vs. Fidelity Advisor Diversified | Lord Abbett vs. Small Cap Stock | Lord Abbett vs. Western Asset Diversified |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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