Correlation Between Floating Rate and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Lord Abbett 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 Floating Rate and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Lord Abbett Balanced, you can compare the effects of market volatilities on Floating Rate and Lord Abbett 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 Floating Rate with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Lord Abbett.
Diversification Opportunities for Floating Rate and Lord Abbett
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Floating and LORD is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Lord Abbett Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Balanced and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Balanced has no effect on the direction of Floating Rate i.e., Floating Rate and Lord Abbett go up and down completely randomly.
Pair Corralation between Floating Rate and Lord Abbett
Assuming the 90 days horizon Floating Rate is expected to generate 1.68 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Floating Rate Fund is 3.0 times less risky than Lord Abbett. It trades about 0.25 of its potential returns per unit of risk. Lord Abbett Balanced is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 992.00 in Lord Abbett Balanced on August 31, 2024 and sell it today you would earn a total of 277.00 from holding Lord Abbett Balanced or generate 27.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. Lord Abbett Balanced
Performance |
| Timeline |
| Floating Rate |
| Lord Abbett Balanced |
Floating Rate and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Lord Abbett
The main advantage of trading using opposite Floating Rate and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Floating Rate vs. Davis Financial Fund | Floating Rate vs. Financials Ultrasector Profund | Floating Rate vs. Mesirow Financial Small | Floating Rate vs. Vanguard Financials Index |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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