Correlation Between Lord Abbett and American Funds
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Funds 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 American Funds 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 American Funds 2065, you can compare the effects of market volatilities on Lord Abbett and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Funds.
Diversification Opportunities for Lord Abbett and American Funds
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Funds go up and down completely randomly.
Pair Corralation between Lord Abbett and American Funds
Assuming the 90 days horizon Lord Abbett is expected to generate 1.81 times less return on investment than American Funds. But when comparing it to its historical volatility, Lord Abbett Diversified is 1.99 times less risky than American Funds. It trades about 0.11 of its potential returns per unit of risk. American Funds 2065 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,319 in American Funds 2065 on September 4, 2024 and sell it today you would earn a total of 513.00 from holding American Funds 2065 or generate 38.89% 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. American Funds 2065
Performance |
| Timeline |
| Lord Abbett Diversified |
| American Funds 2065 |
Lord Abbett and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Funds
The main advantage of trading using opposite Lord Abbett and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Templeton Developing Markets | American Funds vs. Locorr Market Trend | American Funds vs. Massmutual Select Diversified | American Funds vs. Mondrian Emerging Markets |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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