Correlation Between Lord Abbett and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Focused and Dow Jones Industrial, you can compare the effects of market volatilities on Lord Abbett and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Dow Jones.
Diversification Opportunities for Lord Abbett and Dow Jones
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and Dow is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Focused and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Focused are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lord Abbett i.e., Lord Abbett and Dow Jones go up and down completely randomly.
Pair Corralation between Lord Abbett and Dow Jones
Assuming the 90 days horizon Lord Abbett Focused is expected to generate 1.02 times more return on investment than Dow Jones. However, Lord Abbett is 1.02 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,139 in Lord Abbett Focused on November 3, 2024 and sell it today you would earn a total of 242.00 from holding Lord Abbett Focused or generate 21.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Focused vs. Dow Jones Industrial
Performance |
| Timeline |
Lord Abbett and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lord Abbett Focused
Pair trading matchups for Lord Abbett
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lord Abbett and Dow Jones
The main advantage of trading using opposite Lord Abbett and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lord Abbett vs. Morgan Stanley Emerging | Lord Abbett vs. Franklin Emerging Market | Lord Abbett vs. Barings Emerging Markets | Lord Abbett vs. Nasdaq 100 2x Strategy |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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