Correlation Between Lord Abbett and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Washington Mutual 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 Washington Mutual 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 Washington Mutual Investors, you can compare the effects of market volatilities on Lord Abbett and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Washington Mutual.
Diversification Opportunities for Lord Abbett and Washington Mutual
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Washington is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Lord Abbett i.e., Lord Abbett and Washington Mutual go up and down completely randomly.
Pair Corralation between Lord Abbett and Washington Mutual
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.81 times more return on investment than Washington Mutual. However, Lord Abbett Convertible is 1.24 times less risky than Washington Mutual. It trades about 0.65 of its potential returns per unit of risk. Washington Mutual Investors 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Convertible vs. Washington Mutual Investors
Performance |
| Timeline |
| Lord Abbett Convertible |
| Washington Mutual |
Lord Abbett and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Washington Mutual
The main advantage of trading using opposite Lord Abbett and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual'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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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