Correlation Between Lord Abbett and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Regional Bank 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 Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Diversified and Regional Bank Fund, you can compare the effects of market volatilities on Lord Abbett and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Regional Bank.
Diversification Opportunities for Lord Abbett and Regional Bank
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Regional is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Diversified are associated (or correlated) with Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Lord Abbett i.e., Lord Abbett and Regional Bank go up and down completely randomly.
Pair Corralation between Lord Abbett and Regional Bank
Assuming the 90 days horizon Lord Abbett Diversified is expected to generate 0.32 times more return on investment than Regional Bank. However, Lord Abbett Diversified is 3.08 times less risky than Regional Bank. It trades about 0.08 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.02 per unit of risk. If you would invest 1,627 in Lord Abbett Diversified on September 18, 2024 and sell it today you would earn a total of 7.00 from holding Lord Abbett Diversified or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Regional Bank Fund
Performance |
| Timeline |
| Lord Abbett Diversified |
| Regional Bank |
Lord Abbett and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Regional Bank
The main advantage of trading using opposite Lord Abbett and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| Regional Bank vs. Fulcrum Diversified Absolute | Regional Bank vs. Lord Abbett Diversified | Regional Bank vs. Jpmorgan Diversified Fund | Regional Bank vs. Federated Hermes Conservative |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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