Correlation Between Lord Abbett and American Funds
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Funds 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 Funds 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 Funds Global, you can compare the effects of market volatilities on Lord Abbett and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Funds.
Diversification Opportunities for Lord Abbett and American Funds
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Funds go up and down completely randomly.
Pair Corralation between Lord Abbett and American Funds
Assuming the 90 days horizon Lord Abbett Small is expected to generate 1.43 times more return on investment than American Funds. However, Lord Abbett is 1.43 times more volatile than American Funds Global. It trades about 0.06 of its potential returns per unit of risk. American Funds Global is currently generating about 0.08 per unit of risk. If you would invest 1,964 in Lord Abbett Small on September 12, 2024 and sell it today you would earn a total of 484.00 from holding Lord Abbett Small or generate 24.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Lord Abbett Small vs. American Funds Global
Performance |
| Timeline |
| Lord Abbett Small |
| American Funds Global |
Lord Abbett and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Funds
The main advantage of trading using opposite Lord Abbett and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Lord Abbett vs. Siit Ultra Short | Lord Abbett vs. Quantitative Longshort Equity | Lord Abbett vs. Virtus Multi Sector Short | Lord Abbett vs. Aqr Long Short Equity |
| American Funds vs. American Funds New | American Funds vs. American Funds New | American Funds vs. New Perspective Fund | American Funds vs. New Perspective Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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