Correlation Between Lord Abbett and Vaughan Nelson
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Vaughan Nelson 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 Vaughan Nelson 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 Vaughan Nelson Value, you can compare the effects of market volatilities on Lord Abbett and Vaughan Nelson 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 Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Vaughan Nelson.
Diversification Opportunities for Lord Abbett and Vaughan Nelson
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lord and Vaughan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Vaughan Nelson Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Value 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Value has no effect on the direction of Lord Abbett i.e., Lord Abbett and Vaughan Nelson go up and down completely randomly.
Pair Corralation between Lord Abbett and Vaughan Nelson
Assuming the 90 days horizon Lord Abbett is expected to generate 1.8 times less return on investment than Vaughan Nelson. But when comparing it to its historical volatility, Lord Abbett Inflation is 8.19 times less risky than Vaughan Nelson. It trades about 0.18 of its potential returns per unit of risk. Vaughan Nelson Value is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,346 in Vaughan Nelson Value on November 3, 2024 and sell it today you would earn a total of 249.00 from holding Vaughan Nelson Value or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Inflation vs. Vaughan Nelson Value
Performance |
| Timeline |
| Lord Abbett Inflation |
| Vaughan Nelson Value |
Lord Abbett and Vaughan Nelson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Vaughan Nelson
The main advantage of trading using opposite Lord Abbett and Vaughan Nelson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Vaughan Nelson 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 Vaughan Nelson will offset losses from the drop in Vaughan Nelson's long position.| Lord Abbett vs. Cref Money Market | Lord Abbett vs. Edward Jones Money | Lord Abbett vs. Financials Ultrasector Profund | Lord Abbett vs. Chestnut Street Exchange |
| Vaughan Nelson vs. Gmo High Yield | Vaughan Nelson vs. Virtus High Yield | Vaughan Nelson vs. Lord Abbett Short | Vaughan Nelson vs. Siit High Yield |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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