Correlation Between Lord Abbett and New Economy
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and New Economy 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 New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Short and New Economy Fund, you can compare the effects of market volatilities on Lord Abbett and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and New Economy.
Diversification Opportunities for Lord Abbett and New Economy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lord and New is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Short and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 Short are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Lord Abbett i.e., Lord Abbett and New Economy go up and down completely randomly.
Pair Corralation between Lord Abbett and New Economy
Assuming the 90 days horizon Lord Abbett is expected to generate 12.99 times less return on investment than New Economy. But when comparing it to its historical volatility, Lord Abbett Short is 14.26 times less risky than New Economy. It trades about 0.22 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,804 in New Economy Fund on September 15, 2024 and sell it today you would earn a total of 194.00 from holding New Economy Fund or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Short vs. New Economy Fund
Performance |
| Timeline |
| Lord Abbett Short |
| New Economy Fund |
Lord Abbett and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and New Economy
The main advantage of trading using opposite Lord Abbett and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Lord Abbett vs. Alliancebernstein Bond | Lord Abbett vs. T Rowe Price | Lord Abbett vs. Doubleline Yield Opportunities | Lord Abbett vs. Morningstar Defensive Bond |
| New Economy vs. Easterly Snow Longshort | New Economy vs. Barings Active Short | New Economy vs. Blackrock Short Term Inflat Protected | New Economy vs. Lord Abbett Short |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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