Correlation Between Lord Abbett and Cref Inflation-linked
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Cref Inflation-linked 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 Cref Inflation-linked 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 Cref Inflation Linked Bond, you can compare the effects of market volatilities on Lord Abbett and Cref Inflation-linked 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 Cref Inflation-linked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Cref Inflation-linked.
Diversification Opportunities for Lord Abbett and Cref Inflation-linked
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lord and CREF is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Cref Inflation Linked Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Inflation Linked 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 Cref Inflation-linked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Inflation Linked has no effect on the direction of Lord Abbett i.e., Lord Abbett and Cref Inflation-linked go up and down completely randomly.
Pair Corralation between Lord Abbett and Cref Inflation-linked
Assuming the 90 days horizon Lord Abbett Inflation is expected to generate 0.85 times more return on investment than Cref Inflation-linked. However, Lord Abbett Inflation is 1.18 times less risky than Cref Inflation-linked. It trades about 0.08 of its potential returns per unit of risk. Cref Inflation Linked Bond is currently generating about 0.06 per unit of risk. If you would invest 1,074 in Lord Abbett Inflation on September 3, 2024 and sell it today you would earn a total of 89.00 from holding Lord Abbett Inflation or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Inflation vs. Cref Inflation Linked Bond
Performance |
| Timeline |
| Lord Abbett Inflation |
| Cref Inflation Linked |
Lord Abbett and Cref Inflation-linked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Cref Inflation-linked
The main advantage of trading using opposite Lord Abbett and Cref Inflation-linked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Cref Inflation-linked 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 Cref Inflation-linked will offset losses from the drop in Cref Inflation-linked'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 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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