Correlation Between Lord Abbett and Davis Financial
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Davis Financial 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 Davis Financial 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 Davis Financial Fund, you can compare the effects of market volatilities on Lord Abbett and Davis Financial 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 Davis Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Davis Financial.
Diversification Opportunities for Lord Abbett and Davis Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and Davis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Davis Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Financial 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 Davis Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Financial has no effect on the direction of Lord Abbett i.e., Lord Abbett and Davis Financial go up and down completely randomly.
Pair Corralation between Lord Abbett and Davis Financial
Assuming the 90 days horizon Lord Abbett is expected to generate 1.85 times less return on investment than Davis Financial. But when comparing it to its historical volatility, Lord Abbett Convertible is 1.9 times less risky than Davis Financial. It trades about 0.16 of its potential returns per unit of risk. Davis Financial Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,722 in Davis Financial Fund on September 4, 2024 and sell it today you would earn a total of 1,622 from holding Davis Financial Fund or generate 43.58% 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. Davis Financial Fund
Performance |
| Timeline |
| Lord Abbett Convertible |
| Davis Financial |
Lord Abbett and Davis Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Davis Financial
The main advantage of trading using opposite Lord Abbett and Davis Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Davis Financial 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 Davis Financial will offset losses from the drop in Davis Financial's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| Davis Financial vs. Absolute Convertible Arbitrage | Davis Financial vs. Rationalpier 88 Convertible | Davis Financial vs. Gabelli Convertible And | Davis Financial vs. Lord Abbett Convertible |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |