Correlation Between Lord Abbett and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Westwood Largecap 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 Westwood Largecap 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 Westwood Largecap Value, you can compare the effects of market volatilities on Lord Abbett and Westwood Largecap 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 Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Westwood Largecap.
Diversification Opportunities for Lord Abbett and Westwood Largecap
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lord and Westwood is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap 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 Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Lord Abbett i.e., Lord Abbett and Westwood Largecap go up and down completely randomly.
Pair Corralation between Lord Abbett and Westwood Largecap
Assuming the 90 days horizon Lord Abbett is expected to generate 2.93 times less return on investment than Westwood Largecap. But when comparing it to its historical volatility, Lord Abbett Inflation is 3.95 times less risky than Westwood Largecap. It trades about 0.13 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,305 in Westwood Largecap Value on September 14, 2024 and sell it today you would earn a total of 197.00 from holding Westwood Largecap Value or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Inflation vs. Westwood Largecap Value
Performance |
| Timeline |
| Lord Abbett Inflation |
| Westwood Largecap Value |
Lord Abbett and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Westwood Largecap
The main advantage of trading using opposite Lord Abbett and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Westwood Largecap 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 Westwood Largecap will offset losses from the drop in Westwood Largecap's long position.| Lord Abbett vs. Aqr Long Short Equity | Lord Abbett vs. Shelton Emerging Markets | Lord Abbett vs. Ashmore Emerging Markets | Lord Abbett vs. Transamerica Emerging Markets |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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