Correlation Between Lord Abbett and Voya Index
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Voya Index 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 Voya Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Govt and Voya Index Plus, you can compare the effects of market volatilities on Lord Abbett and Voya Index 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 Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Voya Index.
Diversification Opportunities for Lord Abbett and Voya Index
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Voya is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Govt and Voya Index Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Plus 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 Govt are associated (or correlated) with Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Plus has no effect on the direction of Lord Abbett i.e., Lord Abbett and Voya Index go up and down completely randomly.
Pair Corralation between Lord Abbett and Voya Index
Assuming the 90 days horizon Lord Abbett is expected to generate 11.75 times less return on investment than Voya Index. But when comparing it to its historical volatility, Lord Abbett Govt is 7.43 times less risky than Voya Index. It trades about 0.13 of its potential returns per unit of risk. Voya Index Plus is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,034 in Voya Index Plus on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Voya Index Plus or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Govt vs. Voya Index Plus
Performance |
| Timeline |
| Lord Abbett Govt |
| Voya Index Plus |
Lord Abbett and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Voya Index
The main advantage of trading using opposite Lord Abbett and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Voya Index 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 Voya Index will offset losses from the drop in Voya Index's long position.| Lord Abbett vs. Vanguard Total Stock | Lord Abbett vs. Vanguard 500 Index | Lord Abbett vs. Vanguard Total Stock | Lord Abbett vs. Vanguard Total Stock |
| Voya Index vs. Voya Bond Index | Voya Index vs. Voya Bond Index | Voya Index vs. Voya Limited Maturity | Voya Index vs. Voya Limited Maturity |
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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