Correlation Between Lord Abbett and California Municipal
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and California Municipal 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 California Municipal 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 California Municipal Portfolio, you can compare the effects of market volatilities on Lord Abbett and California Municipal 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 California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and California Municipal.
Diversification Opportunities for Lord Abbett and California Municipal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and California is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Intermediate and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 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 Intermediate are associated (or correlated) with California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Lord Abbett i.e., Lord Abbett and California Municipal go up and down completely randomly.
Pair Corralation between Lord Abbett and California Municipal
Assuming the 90 days horizon Lord Abbett Intermediate is expected to generate 1.24 times more return on investment than California Municipal. However, Lord Abbett is 1.24 times more volatile than California Municipal Portfolio. It trades about 0.09 of its potential returns per unit of risk. California Municipal Portfolio is currently generating about 0.07 per unit of risk. If you would invest 981.00 in Lord Abbett Intermediate on November 9, 2024 and sell it today you would earn a total of 47.00 from holding Lord Abbett Intermediate or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Intermediate vs. California Municipal Portfolio
Performance |
| Timeline |
| Lord Abbett Intermediate |
| California Municipal |
Lord Abbett and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and California Municipal
The main advantage of trading using opposite Lord Abbett and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, California Municipal 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 California Municipal will offset losses from the drop in California Municipal's long position.| Lord Abbett vs. Wealthbuilder Moderate Balanced | Lord Abbett vs. Columbia Moderate Growth | Lord Abbett vs. Transamerica Cleartrack Retirement | Lord Abbett vs. Calvert Moderate Allocation |
| California Municipal vs. Gold And Precious | California Municipal vs. Precious Metals And | California Municipal vs. Wells Fargo Advantage | California Municipal vs. Sprott Gold Equity |
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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