Correlation Between Lord Abbett and Ab Select
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Ab Select 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 Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Global and Ab Select Equity, you can compare the effects of market volatilities on Lord Abbett and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Ab Select.
Diversification Opportunities for Lord Abbett and Ab Select
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and AUUIX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Global and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity 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 Global are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Lord Abbett i.e., Lord Abbett and Ab Select go up and down completely randomly.
Pair Corralation between Lord Abbett and Ab Select
Assuming the 90 days horizon Lord Abbett is expected to generate 1.16 times less return on investment than Ab Select. In addition to that, Lord Abbett is 1.2 times more volatile than Ab Select Equity. It trades about 0.12 of its total potential returns per unit of risk. Ab Select Equity is currently generating about 0.17 per unit of volatility. If you would invest 1,676 in Ab Select Equity on August 25, 2024 and sell it today you would earn a total of 687.00 from holding Ab Select Equity or generate 40.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Global vs. Ab Select Equity
Performance |
| Timeline |
| Lord Abbett Global |
| Ab Select Equity |
Lord Abbett and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Ab Select
The main advantage of trading using opposite Lord Abbett and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Lord Abbett vs. Ab Select Equity | Lord Abbett vs. Federated Equity Income | Lord Abbett vs. Gmo Equity Allocation | Lord Abbett vs. Us Vector Equity |
| Ab Select vs. Nuveen Large Cap | Ab Select vs. Nuveen Large Cap | Ab Select vs. HUMANA INC | Ab Select vs. SCOR PK |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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