Correlation Between Lord Abbett and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Nasdaq-100(r) 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 Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Intermediate and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Lord Abbett and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Nasdaq-100(r).
Diversification Opportunities for Lord Abbett and Nasdaq-100(r)
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Nasdaq-100(r) is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Intermediate and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Intermediate are associated (or correlated) with Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Lord Abbett i.e., Lord Abbett and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Lord Abbett and Nasdaq-100(r)
Assuming the 90 days horizon Lord Abbett is expected to generate 12.11 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Lord Abbett Intermediate is 5.02 times less risky than Nasdaq-100(r). It trades about 0.04 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17,692 in Nasdaq 100 2x Strategy on October 26, 2024 and sell it today you would earn a total of 23,603 from holding Nasdaq 100 2x Strategy or generate 133.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lord Abbett Intermediate vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Lord Abbett Intermediate |
| Nasdaq 100 2x |
Lord Abbett and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Nasdaq-100(r)
The main advantage of trading using opposite Lord Abbett and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Lord Abbett vs. Goldman Sachs Technology | Lord Abbett vs. Dreyfus Technology Growth | Lord Abbett vs. Hennessy Technology Fund | Lord Abbett vs. Icon Information Technology |
| Nasdaq-100(r) vs. Tax Managed Mid Small | Nasdaq-100(r) vs. Oklahoma College Savings | Nasdaq-100(r) vs. Wells Fargo Diversified | Nasdaq-100(r) vs. Vy T Rowe |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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