Correlation Between Lord Abbett and Nationwide
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Nationwide 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 Nationwide 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 Nationwide Sp 500, you can compare the effects of market volatilities on Lord Abbett and Nationwide 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 Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Nationwide.
Diversification Opportunities for Lord Abbett and Nationwide
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Nationwide is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Nationwide Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Sp 500 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 Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Sp 500 has no effect on the direction of Lord Abbett i.e., Lord Abbett and Nationwide go up and down completely randomly.
Pair Corralation between Lord Abbett and Nationwide
Assuming the 90 days horizon Lord Abbett is expected to generate 3.85 times less return on investment than Nationwide. But when comparing it to its historical volatility, Lord Abbett Diversified is 2.15 times less risky than Nationwide. It trades about 0.06 of its potential returns per unit of risk. Nationwide Sp 500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,777 in Nationwide Sp 500 on September 12, 2024 and sell it today you would earn a total of 86.00 from holding Nationwide Sp 500 or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Nationwide Sp 500
Performance |
| Timeline |
| Lord Abbett Diversified |
| Nationwide Sp 500 |
Lord Abbett and Nationwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Nationwide
The main advantage of trading using opposite Lord Abbett and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Nationwide 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 Nationwide will offset losses from the drop in Nationwide's long position.The idea behind Lord Abbett Diversified and Nationwide Sp 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nationwide vs. Jhancock Real Estate | Nationwide vs. Guggenheim Risk Managed | Nationwide vs. Redwood Real Estate | Nationwide vs. Prudential Real Estate |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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