Correlation Between Lord Abbett and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Old Westbury 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 Old Westbury 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 Old Westbury Large, you can compare the effects of market volatilities on Lord Abbett and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Old Westbury.
Diversification Opportunities for Lord Abbett and Old Westbury
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Old is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Lord Abbett i.e., Lord Abbett and Old Westbury go up and down completely randomly.
Pair Corralation between Lord Abbett and Old Westbury
Assuming the 90 days horizon Lord Abbett Diversified is expected to generate 0.5 times more return on investment than Old Westbury. However, Lord Abbett Diversified is 2.01 times less risky than Old Westbury. It trades about 0.2 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.08 per unit of risk. If you would invest 1,613 in Lord Abbett Diversified on November 7, 2024 and sell it today you would earn a total of 25.00 from holding Lord Abbett Diversified or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Old Westbury Large
Performance |
| Timeline |
| Lord Abbett Diversified |
| Old Westbury Large |
Lord Abbett and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Old Westbury
The main advantage of trading using opposite Lord Abbett and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Lord Abbett vs. Global Gold Fund | Lord Abbett vs. Great West Goldman Sachs | Lord Abbett vs. Oppenheimer Gold Special | Lord Abbett vs. Gold And Precious |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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