Correlation Between Lord Abbett and Stet California
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Stet California 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 Stet California 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 Stet California Municipal, you can compare the effects of market volatilities on Lord Abbett and Stet California 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 Stet California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Stet California.
Diversification Opportunities for Lord Abbett and Stet California
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Stet is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Stet California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet California Municipal 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 Stet California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet California Municipal has no effect on the direction of Lord Abbett i.e., Lord Abbett and Stet California go up and down completely randomly.
Pair Corralation between Lord Abbett and Stet California
Assuming the 90 days horizon Lord Abbett Diversified is expected to generate 1.96 times more return on investment than Stet California. However, Lord Abbett is 1.96 times more volatile than Stet California Municipal. It trades about 0.22 of its potential returns per unit of risk. Stet California Municipal is currently generating about -0.05 per unit of risk. If you would invest 1,609 in Lord Abbett Diversified on November 4, 2024 and sell it today you would earn a total of 29.00 from holding Lord Abbett Diversified or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Stet California Municipal
Performance |
| Timeline |
| Lord Abbett Diversified |
| Stet California Municipal |
Lord Abbett and Stet California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Stet California
The main advantage of trading using opposite Lord Abbett and Stet California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Stet California 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 Stet California will offset losses from the drop in Stet California's long position.| Lord Abbett vs. Kinetics Market Opportunities | Lord Abbett vs. Nasdaq 100 2x Strategy | Lord Abbett vs. Mid Cap 15x Strategy | Lord Abbett vs. Vanguard Developed Markets |
| Stet California vs. Pnc Balanced Allocation | Stet California vs. Growth Portfolio Class | Stet California vs. Transamerica Asset Allocation | Stet California vs. Slow Capital Growth |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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