Correlation Between Federated Total and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Total 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 Total 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 Total Return and Lord Abbett Diversified, you can compare the effects of market volatilities on Federated Total 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 Total with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Lord Abbett.
Diversification Opportunities for Federated Total and Lord Abbett
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Lord is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return 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 Total 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 Total Return 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 Total i.e., Federated Total and Lord Abbett go up and down completely randomly.
Pair Corralation between Federated Total and Lord Abbett
Assuming the 90 days horizon Federated Total Return is expected to generate 0.9 times more return on investment than Lord Abbett. However, Federated Total Return is 1.11 times less risky than Lord Abbett. It trades about 0.25 of its potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.13 per unit of risk. If you would invest 934.00 in Federated Total Return on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Federated Total Return or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Total Return vs. Lord Abbett Diversified
Performance |
| Timeline |
| Federated Total Return |
| Lord Abbett Diversified |
Federated Total and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Total and Lord Abbett
The main advantage of trading using opposite Federated Total and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total 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 Total vs. Putnman Retirement Ready | Federated Total vs. Franklin Lifesmart Retirement | Federated Total vs. Wilmington Trust Retirement | Federated Total vs. Sa Worldwide Moderate |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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