Correlation Between Lord Abbett and Aam Select
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Aam Select 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 Lord Abbett and Aam Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett High and Aam Select Income, you can compare the effects of market volatilities on Lord Abbett and Aam Select 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 Lord Abbett with a short position of Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Aam Select.
Diversification Opportunities for Lord Abbett and Aam Select
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lord and Aam is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett High and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income and Lord Abbett 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 Lord Abbett High are associated (or correlated) with Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Lord Abbett i.e., Lord Abbett and Aam Select go up and down completely randomly.
Pair Corralation between Lord Abbett and Aam Select
Assuming the 90 days horizon Lord Abbett High is expected to generate 0.72 times more return on investment than Aam Select. However, Lord Abbett High is 1.39 times less risky than Aam Select. It trades about 0.11 of its potential returns per unit of risk. Aam Select Income is currently generating about 0.07 per unit of risk. If you would invest 993.00 in Lord Abbett High on August 31, 2024 and sell it today you would earn a total of 119.00 from holding Lord Abbett High or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Lord Abbett High vs. Aam Select Income
Performance |
| Timeline |
| Lord Abbett High |
| Aam Select Income |
Lord Abbett and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Aam Select
The main advantage of trading using opposite Lord Abbett and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Lord Abbett vs. Columbia Global Technology | Lord Abbett vs. Fidelity Advisor Technology | Lord Abbett vs. Biotechnology Ultrasector Profund | Lord Abbett vs. Towpath Technology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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