Correlation Between Hennessy Equity and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Hennessy Equity 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 Hennessy Equity and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Equity And and Lord Abbett Convertible, you can compare the effects of market volatilities on Hennessy Equity 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 Hennessy Equity with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Equity and Lord Abbett.
Diversification Opportunities for Hennessy Equity and Lord Abbett
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Lord is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Equity And and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Hennessy Equity 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 Hennessy Equity And 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 Convertible has no effect on the direction of Hennessy Equity i.e., Hennessy Equity and Lord Abbett go up and down completely randomly.
Pair Corralation between Hennessy Equity and Lord Abbett
Assuming the 90 days horizon Hennessy Equity is expected to generate 1.71 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Hennessy Equity And is 1.08 times less risky than Lord Abbett. It trades about 0.44 of its potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.69 of returns per unit of risk over similar time horizon. If you would invest 1,382 in Lord Abbett Convertible on September 3, 2024 and sell it today you would earn a total of 111.00 from holding Lord Abbett Convertible or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Equity And vs. Lord Abbett Convertible
Performance |
| Timeline |
| Hennessy Equity And |
| Lord Abbett Convertible |
Hennessy Equity and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Equity and Lord Abbett
The main advantage of trading using opposite Hennessy Equity and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Equity 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.| Hennessy Equity vs. American Funds American | Hennessy Equity vs. American Funds American | Hennessy Equity vs. American Balanced | Hennessy Equity vs. American Balanced Fund |
| Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Allianzgi Vertible Fund | Lord Abbett vs. Virtus Convertible |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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