Correlation Between Lord Abbett and Prudential Global
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Prudential Global 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 Prudential Global 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 Prudential Global Total, you can compare the effects of market volatilities on Lord Abbett and Prudential Global 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 Prudential Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Prudential Global.
Diversification Opportunities for Lord Abbett and Prudential Global
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lord and Prudential is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett High and Prudential Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Global Total 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 Prudential Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Global Total has no effect on the direction of Lord Abbett i.e., Lord Abbett and Prudential Global go up and down completely randomly.
Pair Corralation between Lord Abbett and Prudential Global
Assuming the 90 days horizon Lord Abbett High is expected to generate 0.7 times more return on investment than Prudential Global. However, Lord Abbett High is 1.42 times less risky than Prudential Global. It trades about 0.16 of its potential returns per unit of risk. Prudential Global Total is currently generating about 0.06 per unit of risk. If you would invest 563.00 in Lord Abbett High on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Lord Abbett High or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett High vs. Prudential Global Total
Performance |
| Timeline |
| Lord Abbett High |
| Prudential Global Total |
Lord Abbett and Prudential Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Prudential Global
The main advantage of trading using opposite Lord Abbett and Prudential Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Prudential Global 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 Prudential Global will offset losses from the drop in Prudential Global's long position.| Lord Abbett vs. Elfun Diversified Fund | Lord Abbett vs. Wealthbuilder Conservative Allocation | Lord Abbett vs. Lord Abbett Diversified | Lord Abbett vs. Federated Hermes Conservative |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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