Correlation Between Lord Abbett and Relative Value
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Relative Value 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 Relative Value 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 The Relative Value, you can compare the effects of market volatilities on Lord Abbett and Relative Value 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 Relative Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Relative Value.
Diversification Opportunities for Lord Abbett and Relative Value
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Relative is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and The Relative Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relative Value 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 Relative Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relative Value has no effect on the direction of Lord Abbett i.e., Lord Abbett and Relative Value go up and down completely randomly.
Pair Corralation between Lord Abbett and Relative Value
Assuming the 90 days horizon Lord Abbett Diversified is expected to under-perform the Relative Value. In addition to that, Lord Abbett is 1.13 times more volatile than The Relative Value. It trades about -0.35 of its total potential returns per unit of risk. The Relative Value is currently generating about -0.16 per unit of volatility. If you would invest 2,723 in The Relative Value on October 7, 2024 and sell it today you would lose (33.00) from holding The Relative Value or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. The Relative Value
Performance |
| Timeline |
| Lord Abbett Diversified |
| Relative Value |
Lord Abbett and Relative Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Relative Value
The main advantage of trading using opposite Lord Abbett and Relative Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Relative Value 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 Relative Value will offset losses from the drop in Relative Value's long position.| Lord Abbett vs. Multisector Bond Sma | Lord Abbett vs. Bbh Intermediate Municipal | Lord Abbett vs. Pioneer Amt Free Municipal | Lord Abbett vs. Versatile Bond Portfolio |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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