Correlation Between Live Oak and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Live Oak and Lord Abbett 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 Live Oak and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Oak Health and Lord Abbett Small, you can compare the effects of market volatilities on Live Oak and Lord Abbett 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 Live Oak with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Lord Abbett.
Diversification Opportunities for Live Oak and Lord Abbett
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and Lord is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Live Oak 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 Live Oak Health are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Small has no effect on the direction of Live Oak i.e., Live Oak and Lord Abbett go up and down completely randomly.
Pair Corralation between Live Oak and Lord Abbett
Assuming the 90 days horizon Live Oak is expected to generate 2.63 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Live Oak Health is 1.7 times less risky than Lord Abbett. It trades about 0.07 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,088 in Lord Abbett Small on September 3, 2024 and sell it today you would earn a total of 395.00 from holding Lord Abbett Small or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. Lord Abbett Small
Performance |
| Timeline |
| Live Oak Health |
| Lord Abbett Small |
Live Oak and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Lord Abbett
The main advantage of trading using opposite Live Oak and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Live Oak vs. Vanguard Health Care | Live Oak vs. Vanguard Health Care | Live Oak vs. T Rowe Price | Live Oak vs. T Rowe Price |
| Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Us Small Cap | Lord Abbett vs. Us Targeted Value |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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