Correlation Between Lord Abbett and Federated Government
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Federated Government 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 Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Health and Federated Government Ultrashort, you can compare the effects of market volatilities on Lord Abbett and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Federated Government.
Diversification Opportunities for Lord Abbett and Federated Government
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lord and Federated is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Health are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Lord Abbett i.e., Lord Abbett and Federated Government go up and down completely randomly.
Pair Corralation between Lord Abbett and Federated Government
Assuming the 90 days horizon Lord Abbett Health is expected to generate 10.22 times more return on investment than Federated Government. However, Lord Abbett is 10.22 times more volatile than Federated Government Ultrashort. It trades about 0.03 of its potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.19 per unit of risk. If you would invest 1,845 in Lord Abbett Health on September 14, 2024 and sell it today you would earn a total of 68.00 from holding Lord Abbett Health or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Health vs. Federated Government Ultrashor
Performance |
| Timeline |
| Lord Abbett Health |
| Federated Government |
Lord Abbett and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Federated Government
The main advantage of trading using opposite Lord Abbett and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Lord Abbett vs. Lord Abbett Short | Lord Abbett vs. Prudential Short Duration | Lord Abbett vs. Boston Partners Longshort | Lord Abbett vs. Siit Ultra Short |
| Federated Government vs. Us Government Securities | Federated Government vs. Payden Government Fund | Federated Government vs. Hsbc Government Money | Federated Government vs. Dreyfus Government Cash |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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