Correlation Between Lord Abbett and Maryland Tax-free
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Maryland Tax-free 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 Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett International and Maryland Tax Free Bond, you can compare the effects of market volatilities on Lord Abbett and Maryland Tax-free 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 Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Maryland Tax-free.
Diversification Opportunities for Lord Abbett and Maryland Tax-free
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and Maryland is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett International and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free 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 International are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Lord Abbett i.e., Lord Abbett and Maryland Tax-free go up and down completely randomly.
Pair Corralation between Lord Abbett and Maryland Tax-free
Assuming the 90 days horizon Lord Abbett International is expected to generate 3.22 times more return on investment than Maryland Tax-free. However, Lord Abbett is 3.22 times more volatile than Maryland Tax Free Bond. It trades about 0.04 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about 0.08 per unit of risk. If you would invest 1,665 in Lord Abbett International on September 4, 2024 and sell it today you would earn a total of 290.00 from holding Lord Abbett International or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett International vs. Maryland Tax Free Bond
Performance |
| Timeline |
| Lord Abbett International |
| Maryland Tax Free |
Lord Abbett and Maryland Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Maryland Tax-free
The main advantage of trading using opposite Lord Abbett and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's 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 |
| Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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