Correlation Between Lord Abbett and State Farm
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and State Farm 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 State Farm 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 State Farm Balanced, you can compare the effects of market volatilities on Lord Abbett and State Farm 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 State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and State Farm.
Diversification Opportunities for Lord Abbett and State Farm
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lord and State is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and State Farm Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Balanced 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 State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Balanced has no effect on the direction of Lord Abbett i.e., Lord Abbett and State Farm go up and down completely randomly.
Pair Corralation between Lord Abbett and State Farm
Assuming the 90 days horizon Lord Abbett is expected to generate 3.54 times less return on investment than State Farm. But when comparing it to its historical volatility, Lord Abbett Inflation is 2.47 times less risky than State Farm. It trades about 0.09 of its potential returns per unit of risk. State Farm Balanced is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,213 in State Farm Balanced on September 13, 2024 and sell it today you would earn a total of 2,642 from holding State Farm Balanced or generate 36.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett Inflation vs. State Farm Balanced
Performance |
| Timeline |
| Lord Abbett Inflation |
| State Farm Balanced |
Lord Abbett and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and State Farm
The main advantage of trading using opposite Lord Abbett and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, State Farm 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 State Farm will offset losses from the drop in State Farm's long position.| Lord Abbett vs. The National Tax Free | Lord Abbett vs. Versatile Bond Portfolio | Lord Abbett vs. Doubleline Yield Opportunities | Lord Abbett vs. Ab Global Bond |
| State Farm vs. Aqr Managed Futures | State Farm vs. Lord Abbett Inflation | State Farm vs. Guggenheim Managed Futures | State Farm vs. Guidepath Managed Futures |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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