Correlation Between Lord Abbett and Income Fund
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Income Fund 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 Income Fund 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 Income Fund Income, you can compare the effects of market volatilities on Lord Abbett and Income Fund 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 Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Income Fund.
Diversification Opportunities for Lord Abbett and Income Fund
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lord and Income is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Income Fund Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund 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 Health are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Income has no effect on the direction of Lord Abbett i.e., Lord Abbett and Income Fund go up and down completely randomly.
Pair Corralation between Lord Abbett and Income Fund
Assuming the 90 days horizon Lord Abbett Health is expected to generate 2.71 times more return on investment than Income Fund. However, Lord Abbett is 2.71 times more volatile than Income Fund Income. It trades about 0.04 of its potential returns per unit of risk. Income Fund Income is currently generating about 0.05 per unit of risk. If you would invest 1,701 in Lord Abbett Health on September 5, 2024 and sell it today you would earn a total of 274.00 from holding Lord Abbett Health or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett Health vs. Income Fund Income
Performance |
| Timeline |
| Lord Abbett Health |
| Income Fund Income |
Lord Abbett and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Income Fund
The main advantage of trading using opposite Lord Abbett and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.| Lord Abbett vs. Scharf Global Opportunity | Lord Abbett vs. Nationwide Global Equity | Lord Abbett vs. Ab Global Risk | Lord Abbett vs. Ab Global Real |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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