Correlation Between Lord Abbett and Western Asset
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Lord Abbett and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Western Asset.
Diversification Opportunities for Lord Abbett and Western Asset
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lord and Western is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Govt and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Lord Abbett i.e., Lord Abbett and Western Asset go up and down completely randomly.
Pair Corralation between Lord Abbett and Western Asset
Assuming the 90 days horizon Lord Abbett Govt is expected to generate 0.42 times more return on investment than Western Asset. However, Lord Abbett Govt is 2.36 times less risky than Western Asset. It trades about 0.13 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.02 per unit of risk. If you would invest 99.00 in Lord Abbett Govt on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Lord Abbett Govt or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Govt vs. Western Asset Inflation
Performance |
| Timeline |
| Lord Abbett Govt |
| Western Asset Inflation |
Lord Abbett and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Western Asset
The main advantage of trading using opposite Lord Abbett and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Aqr Diversified Arbitrage | Western Asset vs. Calvert Conservative Allocation | Western Asset vs. Harbor Diversified International | Western Asset vs. Fidelity Advisor Diversified |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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