Correlation Between Lord Abbett and Short Duration
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Short Duration 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 Short Duration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Short and Short Duration Income, you can compare the effects of market volatilities on Lord Abbett and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Short Duration.
Diversification Opportunities for Lord Abbett and Short Duration
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Short is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Short and Short Duration Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration 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 Short are associated (or correlated) with Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Income has no effect on the direction of Lord Abbett i.e., Lord Abbett and Short Duration go up and down completely randomly.
Pair Corralation between Lord Abbett and Short Duration
Assuming the 90 days horizon Lord Abbett is expected to generate 1.12 times less return on investment than Short Duration. In addition to that, Lord Abbett is 1.23 times more volatile than Short Duration Income. It trades about 0.14 of its total potential returns per unit of risk. Short Duration Income is currently generating about 0.2 per unit of volatility. If you would invest 1,162 in Short Duration Income on August 29, 2024 and sell it today you would earn a total of 35.00 from holding Short Duration Income or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lord Abbett Short vs. Short Duration Income
Performance |
| Timeline |
| Lord Abbett Short |
| Short Duration Income |
Lord Abbett and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Short Duration
The main advantage of trading using opposite Lord Abbett and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| Lord Abbett vs. James Balanced Golden | Lord Abbett vs. Great West Goldman Sachs | Lord Abbett vs. Precious Metals And | Lord Abbett vs. Franklin Gold Precious |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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