Correlation Between Highland Small-cap and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Highland Small-cap 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 Highland Small-cap and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Small Cap Equity and Lord Abbett Diversified, you can compare the effects of market volatilities on Highland Small-cap 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 Highland Small-cap with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Small-cap and Lord Abbett.
Diversification Opportunities for Highland Small-cap and Lord Abbett
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highland and Lord is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Highland Small Cap Equity 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 Highland Small-cap 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 Highland Small Cap Equity 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 Highland Small-cap i.e., Highland Small-cap and Lord Abbett go up and down completely randomly.
Pair Corralation between Highland Small-cap and Lord Abbett
Assuming the 90 days horizon Highland Small-cap is expected to generate 1.71 times less return on investment than Lord Abbett. In addition to that, Highland Small-cap is 3.04 times more volatile than Lord Abbett Diversified. It trades about 0.03 of its total potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.18 per unit of volatility. If you would invest 1,519 in Lord Abbett Diversified on September 3, 2024 and sell it today you would earn a total of 133.00 from holding Lord Abbett Diversified or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Small Cap Equity vs. Lord Abbett Diversified
Performance |
| Timeline |
| Highland Small Cap |
| Lord Abbett Diversified |
Highland Small-cap and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Small-cap and Lord Abbett
The main advantage of trading using opposite Highland Small-cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Small-cap 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.| Highland Small-cap vs. Ancorathelen Small Mid Cap | Highland Small-cap vs. Qs Small Capitalization | Highland Small-cap vs. Small Pany Growth | Highland Small-cap vs. Rbc Small Cap |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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