Correlation Between Lord Abbett and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Ishares 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 Ishares Municipal 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 Ishares Municipal Bond, you can compare the effects of market volatilities on Lord Abbett and Ishares 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 Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Ishares Municipal.
Diversification Opportunities for Lord Abbett and Ishares Municipal
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lord and Ishares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond 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 Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Lord Abbett i.e., Lord Abbett and Ishares Municipal go up and down completely randomly.
Pair Corralation between Lord Abbett and Ishares Municipal
Assuming the 90 days horizon Lord Abbett Small is expected to generate 5.14 times more return on investment than Ishares Municipal. However, Lord Abbett is 5.14 times more volatile than Ishares Municipal Bond. It trades about 0.2 of its potential returns per unit of risk. Ishares Municipal Bond is currently generating about 0.17 per unit of risk. If you would invest 2,230 in Lord Abbett Small on August 24, 2024 and sell it today you would earn a total of 158.00 from holding Lord Abbett Small or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Ishares Municipal Bond
Performance |
| Timeline |
| Lord Abbett Small |
| Ishares Municipal Bond |
Lord Abbett and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Ishares Municipal
The main advantage of trading using opposite Lord Abbett and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Ishares 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Lord Abbett vs. Columbia Global Technology | Lord Abbett vs. Hennessy Technology Fund | Lord Abbett vs. Invesco Technology Fund | Lord Abbett vs. Blackrock Science Technology |
| Ishares Municipal vs. Lord Abbett Small | Ishares Municipal vs. Fidelity Small Cap | Ishares Municipal vs. Small Cap Value Series | Ishares Municipal vs. Victory Rs Partners |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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