Correlation Between Lord Abbett and Federated Ultrashort
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Federated Ultrashort 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 Federated Ultrashort 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 Federated Ultrashort Bond, you can compare the effects of market volatilities on Lord Abbett and Federated Ultrashort 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 Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Federated Ultrashort.
Diversification Opportunities for Lord Abbett and Federated Ultrashort
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and Federated is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort 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 Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Lord Abbett i.e., Lord Abbett and Federated Ultrashort go up and down completely randomly.
Pair Corralation between Lord Abbett and Federated Ultrashort
Assuming the 90 days horizon Lord Abbett Small is expected to generate 12.13 times more return on investment than Federated Ultrashort. However, Lord Abbett is 12.13 times more volatile than Federated Ultrashort Bond. It trades about 0.18 of its potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.09 per unit of risk. If you would invest 2,236 in Lord Abbett Small on August 26, 2024 and sell it today you would earn a total of 241.00 from holding Lord Abbett Small or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Federated Ultrashort Bond
Performance |
| Timeline |
| Lord Abbett Small |
| Federated Ultrashort Bond |
Lord Abbett and Federated Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Federated Ultrashort
The main advantage of trading using opposite Lord Abbett and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Federated Ultrashort 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 Federated Ultrashort will offset losses from the drop in Federated Ultrashort's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| Federated Ultrashort vs. Lord Abbett Small | Federated Ultrashort vs. Ultramid Cap Profund Ultramid Cap | Federated Ultrashort vs. Small Cap Value Series | Federated Ultrashort vs. Ab Discovery Value |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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