Correlation Between Lifestyle and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Lifestyle 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 Lifestyle and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Lord Abbett Inflation, you can compare the effects of market volatilities on Lifestyle 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 Lifestyle with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Lord Abbett.
Diversification Opportunities for Lifestyle and Lord Abbett
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lifestyle and LORD is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Lord Abbett Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Inflation and Lifestyle 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 Lifestyle Ii Moderate 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 Inflation has no effect on the direction of Lifestyle i.e., Lifestyle and Lord Abbett go up and down completely randomly.
Pair Corralation between Lifestyle and Lord Abbett
Assuming the 90 days horizon Lifestyle Ii Moderate is expected to under-perform the Lord Abbett. In addition to that, Lifestyle is 1.77 times more volatile than Lord Abbett Inflation. It trades about -0.05 of its total potential returns per unit of risk. Lord Abbett Inflation is currently generating about -0.08 per unit of volatility. If you would invest 1,169 in Lord Abbett Inflation on August 29, 2024 and sell it today you would lose (7.00) from holding Lord Abbett Inflation or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Lord Abbett Inflation
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Lord Abbett Inflation |
Lifestyle and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Lord Abbett
The main advantage of trading using opposite Lifestyle and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle 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.| Lifestyle vs. Vanguard Wellesley Income | Lifestyle vs. HUMANA INC | Lifestyle vs. Aquagold International | Lifestyle vs. Barloworld Ltd ADR |
| Lord Abbett vs. Moderately Aggressive Balanced | Lord Abbett vs. Transamerica Cleartrack Retirement | Lord Abbett vs. Lifestyle Ii Moderate | Lord Abbett vs. Blackrock Moderate Prepared |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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