Correlation Between Federated Ultrashort and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Ultrashort 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 Ultrashort 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 Ultrashort Bond and Lord Abbett Small, you can compare the effects of market volatilities on Federated Ultrashort 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 Ultrashort with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ultrashort and Lord Abbett.
Diversification Opportunities for Federated Ultrashort and Lord Abbett
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Lord is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ultrashort Bond and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Federated Ultrashort 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 Ultrashort Bond 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 Small has no effect on the direction of Federated Ultrashort i.e., Federated Ultrashort and Lord Abbett go up and down completely randomly.
Pair Corralation between Federated Ultrashort and Lord Abbett
Assuming the 90 days horizon Federated Ultrashort is expected to generate 25.75 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Federated Ultrashort Bond is 16.47 times less risky than Lord Abbett. It trades about 0.2 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,222 in Lord Abbett Small on August 26, 2024 and sell it today you would earn a total of 255.00 from holding Lord Abbett Small or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ultrashort Bond vs. Lord Abbett Small
Performance |
| Timeline |
| Federated Ultrashort Bond |
| Lord Abbett Small |
Federated Ultrashort and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ultrashort and Lord Abbett
The main advantage of trading using opposite Federated Ultrashort and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ultrashort 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 Ultrashort vs. Lord Abbett Small | Federated Ultrashort vs. Ultramid Cap Profund Ultramid Cap | Federated Ultrashort vs. Small Cap Value Series | Federated Ultrashort vs. Ab Discovery Value |
| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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