Correlation Between Lord Abbett and American Beacon
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Beacon 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 Beacon 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 Beacon Stephens, you can compare the effects of market volatilities on Lord Abbett and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Beacon.
Diversification Opportunities for Lord Abbett and American Beacon
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and American is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Beacon go up and down completely randomly.
Pair Corralation between Lord Abbett and American Beacon
Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.49 times more return on investment than American Beacon. However, Lord Abbett Convertible is 2.06 times less risky than American Beacon. It trades about 0.17 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.03 per unit of risk. If you would invest 1,382 in Lord Abbett Convertible on October 26, 2024 and sell it today you would earn a total of 101.00 from holding Lord Abbett Convertible or generate 7.31% 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 Beacon Stephens
Performance |
| Timeline |
| Lord Abbett Convertible |
| American Beacon Stephens |
Lord Abbett and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Beacon
The main advantage of trading using opposite Lord Abbett and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Lord Abbett vs. Conservative Balanced Allocation | Lord Abbett vs. Valic Company I | Lord Abbett vs. Delaware Limited Term Diversified | Lord Abbett vs. Voya Retirement Servative |
| American Beacon vs. Lord Abbett Convertible | American Beacon vs. Columbia Convertible Securities | American Beacon vs. Virtus Convertible | American Beacon vs. Putnam Convertible Securities |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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