Correlation Between Lord Abbett and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Inflation-protected 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 Inflation-protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Lord Abbett and Inflation-protected 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 Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Inflation-protected.
Diversification Opportunities for Lord Abbett and Inflation-protected
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Inflation-protected is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Lord Abbett i.e., Lord Abbett and Inflation-protected go up and down completely randomly.
Pair Corralation between Lord Abbett and Inflation-protected
Assuming the 90 days horizon Lord Abbett is expected to generate 1.6 times less return on investment than Inflation-protected. But when comparing it to its historical volatility, Lord Abbett Inflation is 1.95 times less risky than Inflation-protected. It trades about 0.08 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 913.00 in Inflation Protected Bond Fund on September 3, 2024 and sell it today you would earn a total of 121.00 from holding Inflation Protected Bond Fund or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Inflation vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Lord Abbett Inflation |
| Inflation Protected |
Lord Abbett and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Inflation-protected
The main advantage of trading using opposite Lord Abbett and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected's long position.| Lord Abbett vs. Health Biotchnology Portfolio | Lord Abbett vs. Invesco Global Health | Lord Abbett vs. Health Biotchnology Portfolio | Lord Abbett vs. Baillie Gifford Health |
| Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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