Correlation Between Lord Abbett and The Arbitrage
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and The Arbitrage 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 The Arbitrage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Small and The Arbitrage Credit, you can compare the effects of market volatilities on Lord Abbett and The Arbitrage 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 The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and The Arbitrage.
Diversification Opportunities for Lord Abbett and The Arbitrage
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and The is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit 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 Small are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Lord Abbett i.e., Lord Abbett and The Arbitrage go up and down completely randomly.
Pair Corralation between Lord Abbett and The Arbitrage
Assuming the 90 days horizon Lord Abbett Small is expected to generate 10.63 times more return on investment than The Arbitrage. However, Lord Abbett is 10.63 times more volatile than The Arbitrage Credit. It trades about 0.11 of its potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.21 per unit of risk. If you would invest 1,777 in Lord Abbett Small on September 1, 2024 and sell it today you would earn a total of 703.00 from holding Lord Abbett Small or generate 39.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. The Arbitrage Credit
Performance |
| Timeline |
| Lord Abbett Small |
| Arbitrage Credit |
Lord Abbett and The Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and The Arbitrage
The main advantage of trading using opposite Lord Abbett and The Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, The Arbitrage 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 The Arbitrage will offset losses from the drop in The Arbitrage's long position.| Lord Abbett vs. Prudential Health Sciences | Lord Abbett vs. Hartford Healthcare Hls | Lord Abbett vs. Live Oak Health | Lord Abbett vs. Baron Health Care |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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