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 Funds, 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
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and American is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and American Beacon Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Funds 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 Funds 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 2.91 times more return on investment than American Beacon. However, Lord Abbett is 2.91 times more volatile than American Beacon Funds. It trades about 0.09 of its potential returns per unit of risk. American Beacon Funds is currently generating about 0.21 per unit of risk. If you would invest 1,218 in Lord Abbett Convertible on September 12, 2024 and sell it today you would earn a total of 255.00 from holding Lord Abbett Convertible or generate 20.94% 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 Funds
Performance |
| Timeline |
| Lord Abbett Convertible |
| American Beacon Funds |
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. Franklin Vertible Securities | Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Franklin Vertible 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |