Correlation Between Lord Abbett and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Prudential Emerging 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 Prudential Emerging 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 Prudential Emerging Markets, you can compare the effects of market volatilities on Lord Abbett and Prudential Emerging 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 Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Prudential Emerging.
Diversification Opportunities for Lord Abbett and Prudential Emerging
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lord and Prudential is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging 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 Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Lord Abbett i.e., Lord Abbett and Prudential Emerging go up and down completely randomly.
Pair Corralation between Lord Abbett and Prudential Emerging
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 1.23 times more return on investment than Prudential Emerging. However, Lord Abbett is 1.23 times more volatile than Prudential Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 1,210 in Lord Abbett Convertible on September 4, 2024 and sell it today you would earn a total of 277.00 from holding Lord Abbett Convertible or generate 22.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Convertible vs. Prudential Emerging Markets
Performance |
| Timeline |
| Lord Abbett Convertible |
| Prudential Emerging |
Lord Abbett and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Prudential Emerging
The main advantage of trading using opposite Lord Abbett and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Prudential Emerging 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 Prudential Emerging will offset losses from the drop in Prudential Emerging'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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