Correlation Between Lord Abbett and American High-income
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American High-income 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 American High-income 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 American High Income Municipal, you can compare the effects of market volatilities on Lord Abbett and American High-income 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 American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American High-income.
Diversification Opportunities for Lord Abbett and American High-income
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income 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 American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Lord Abbett i.e., Lord Abbett and American High-income go up and down completely randomly.
Pair Corralation between Lord Abbett and American High-income
Assuming the 90 days horizon Lord Abbett Small is expected to generate 3.72 times more return on investment than American High-income. However, Lord Abbett is 3.72 times more volatile than American High Income Municipal. It trades about 0.16 of its potential returns per unit of risk. American High Income Municipal is currently generating about 0.07 per unit of risk. If you would invest 2,120 in Lord Abbett Small on October 28, 2024 and sell it today you would earn a total of 60.00 from holding Lord Abbett Small or generate 2.83% 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. American High Income Municipal
Performance |
| Timeline |
| Lord Abbett Small |
| American High Income |
Lord Abbett and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American High-income
The main advantage of trading using opposite Lord Abbett and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American High-income 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 American High-income will offset losses from the drop in American High-income's long position.| Lord Abbett vs. Aig Government Money | Lord Abbett vs. Intermediate Term Tax Free Bond | Lord Abbett vs. Bbh Intermediate Municipal | Lord Abbett vs. Gurtin California Muni |
| American High-income vs. Mid Cap Growth | American High-income vs. Rational Defensive Growth | American High-income vs. Eip Growth And | American High-income vs. Small Cap Growth |
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 Stocks Directory module to find actively traded stocks across global markets.
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