Correlation Between Lord Abbett and World Energy
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and World Energy 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 World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Convertible and World Energy Fund, you can compare the effects of market volatilities on Lord Abbett and World Energy 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 World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and World Energy.
Diversification Opportunities for Lord Abbett and World Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and World is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy 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 Convertible are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Lord Abbett i.e., Lord Abbett and World Energy go up and down completely randomly.
Pair Corralation between Lord Abbett and World Energy
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.5 times more return on investment than World Energy. However, Lord Abbett Convertible is 1.98 times less risky than World Energy. It trades about 0.18 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.02 per unit of risk. If you would invest 1,455 in Lord Abbett Convertible on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Lord Abbett Convertible or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Convertible vs. World Energy Fund
Performance |
| Timeline |
| Lord Abbett Convertible |
| World Energy |
Lord Abbett and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and World Energy
The main advantage of trading using opposite Lord Abbett and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Lord Abbett vs. Voya High Yield | Lord Abbett vs. Guggenheim High Yield | Lord Abbett vs. T Rowe Price | Lord Abbett vs. Blackrock High Yield |
| World Energy vs. Hennessy Bp Energy | World Energy vs. Franklin Natural Resources | World Energy vs. Icon Natural Resources | World Energy vs. Gamco Natural Resources |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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