Correlation Between Lord Abbett and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Bny Mellon 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 Bny Mellon 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 Bny Mellon Intermediate, you can compare the effects of market volatilities on Lord Abbett and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Bny Mellon.
Diversification Opportunities for Lord Abbett and Bny Mellon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Bny is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Bny Mellon Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Intermediate 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 Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Intermediate has no effect on the direction of Lord Abbett i.e., Lord Abbett and Bny Mellon go up and down completely randomly.
Pair Corralation between Lord Abbett and Bny Mellon
Assuming the 90 days horizon Lord Abbett is expected to generate 1.12 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Lord Abbett Inflation is 1.1 times less risky than Bny Mellon. It trades about 0.17 of its potential returns per unit of risk. Bny Mellon Intermediate is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,190 in Bny Mellon Intermediate on December 8, 2024 and sell it today you would earn a total of 8.00 from holding Bny Mellon Intermediate or generate 0.67% 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. Bny Mellon Intermediate
Performance |
| Timeline |
| Lord Abbett Inflation |
| Bny Mellon Intermediate |
Lord Abbett and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Bny Mellon
The main advantage of trading using opposite Lord Abbett and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.| Lord Abbett vs. Goldman Sachs Technology | ||
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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