Correlation Between Lord Abbett and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Sterling Capital 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 Sterling Capital 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 Sterling Capital Equity, you can compare the effects of market volatilities on Lord Abbett and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Sterling Capital.
Diversification Opportunities for Lord Abbett and Sterling Capital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Sterling is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Sterling Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Equity 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Equity has no effect on the direction of Lord Abbett i.e., Lord Abbett and Sterling Capital go up and down completely randomly.
Pair Corralation between Lord Abbett and Sterling Capital
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.73 times more return on investment than Sterling Capital. However, Lord Abbett Convertible is 1.37 times less risky than Sterling Capital. It trades about 0.65 of its potential returns per unit of risk. Sterling Capital Equity is currently generating about 0.27 per unit of risk. If you would invest 1,383 in Lord Abbett Convertible on September 1, 2024 and sell it today you would earn a total of 110.00 from holding Lord Abbett Convertible or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lord Abbett Convertible vs. Sterling Capital Equity
Performance |
| Timeline |
| Lord Abbett Convertible |
| Sterling Capital Equity |
Lord Abbett and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Sterling Capital
The main advantage of trading using opposite Lord Abbett and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Lord Abbett vs. Ab Bond Inflation | Lord Abbett vs. Nuveen Arizona Municipal | Lord Abbett vs. Federated Ohio Municipal | Lord Abbett vs. Oklahoma Municipal Fund |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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