Correlation Between Lord Abbett and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Ab Municipal 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 Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Inflation and Ab Municipal Bond, you can compare the effects of market volatilities on Lord Abbett and Ab Municipal 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 Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Ab Municipal.
Diversification Opportunities for Lord Abbett and Ab Municipal
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and AUNYX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond 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 Inflation are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Lord Abbett i.e., Lord Abbett and Ab Municipal go up and down completely randomly.
Pair Corralation between Lord Abbett and Ab Municipal
Assuming the 90 days horizon Lord Abbett is expected to generate 2.05 times less return on investment than Ab Municipal. But when comparing it to its historical volatility, Lord Abbett Inflation is 1.02 times less risky than Ab Municipal. It trades about 0.1 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,073 in Ab Municipal Bond on August 24, 2024 and sell it today you would earn a total of 8.00 from holding Ab Municipal Bond or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lord Abbett Inflation vs. Ab Municipal Bond
Performance |
| Timeline |
| Lord Abbett Inflation |
| Ab Municipal Bond |
Lord Abbett and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Ab Municipal
The main advantage of trading using opposite Lord Abbett and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Ab Municipal 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 Municipal will offset losses from the drop in Ab Municipal's long position.| Lord Abbett vs. Vanguard Short Term Inflation Protected | Lord Abbett vs. Vanguard Short Term Inflation Protected | Lord Abbett vs. T Rowe Price | Lord Abbett vs. T Rowe Price |
| Ab Municipal vs. Vanguard Limited Term Tax Exempt | Ab Municipal vs. Vanguard Limited Term Tax Exempt | Ab Municipal vs. Vanguard Short Term Tax Exempt | Ab Municipal vs. Goldman Sachs Short |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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