Correlation Between Lord Abbett and First Eagle
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and First Eagle 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 First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett High and First Eagle Small, you can compare the effects of market volatilities on Lord Abbett and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and First Eagle.
Diversification Opportunities for Lord Abbett and First Eagle
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett High and First Eagle Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Small 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 High are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Small has no effect on the direction of Lord Abbett i.e., Lord Abbett and First Eagle go up and down completely randomly.
Pair Corralation between Lord Abbett and First Eagle
Assuming the 90 days horizon Lord Abbett is expected to generate 1.73 times less return on investment than First Eagle. But when comparing it to its historical volatility, Lord Abbett High is 1.82 times less risky than First Eagle. It trades about 0.05 of its potential returns per unit of risk. First Eagle Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 866.00 in First Eagle Small on September 4, 2024 and sell it today you would earn a total of 277.00 from holding First Eagle Small or generate 31.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett High vs. First Eagle Small
Performance |
| Timeline |
| Lord Abbett High |
| First Eagle Small |
Lord Abbett and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and First Eagle
The main advantage of trading using opposite Lord Abbett and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| Lord Abbett vs. Clearbridge Energy Mlp | Lord Abbett vs. World Energy Fund | Lord Abbett vs. Hennessy Bp Energy | Lord Abbett vs. Oil Gas Ultrasector |
| First Eagle vs. Vanguard Windsor Fund | First Eagle vs. Fundamental Large Cap | First Eagle vs. Fidelity Series 1000 | First Eagle vs. Vela Large Cap |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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