Correlation Between Lord Abbett and American Funds
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Funds 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 American Funds 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 American Funds Income, you can compare the effects of market volatilities on Lord Abbett and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Funds.
Diversification Opportunities for Lord Abbett and American Funds
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Funds go up and down completely randomly.
Pair Corralation between Lord Abbett and American Funds
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 1.47 times more return on investment than American Funds. However, Lord Abbett is 1.47 times more volatile than American Funds Income. It trades about 0.16 of its potential returns per unit of risk. American Funds Income is currently generating about 0.17 per unit of risk. If you would invest 1,192 in Lord Abbett Convertible on September 14, 2024 and sell it today you would earn a total of 290.00 from holding Lord Abbett Convertible or generate 24.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Convertible vs. American Funds Income
Performance |
| Timeline |
| Lord Abbett Convertible |
| American Funds Income |
Lord Abbett and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Funds
The main advantage of trading using opposite Lord Abbett and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Lord Abbett vs. Towpath Technology | Lord Abbett vs. Columbia Global Technology | Lord Abbett vs. Pgim Jennison Technology | Lord Abbett vs. Dreyfus Technology Growth |
| American Funds vs. Lord Abbett Convertible | American Funds vs. Gabelli Convertible And | American Funds vs. Putnam Convertible Incm Gwth | American Funds vs. Virtus 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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