Correlation Between Lord Abbett and Hennessy Nerstone
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Hennessy Nerstone 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 Hennessy Nerstone 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 Hennessy Nerstone Mid, you can compare the effects of market volatilities on Lord Abbett and Hennessy Nerstone 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 Hennessy Nerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Hennessy Nerstone.
Diversification Opportunities for Lord Abbett and Hennessy Nerstone
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Hennessy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid 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 Hennessy Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Lord Abbett i.e., Lord Abbett and Hennessy Nerstone go up and down completely randomly.
Pair Corralation between Lord Abbett and Hennessy Nerstone
Assuming the 90 days horizon Lord Abbett Small is expected to generate 1.38 times more return on investment than Hennessy Nerstone. However, Lord Abbett is 1.38 times more volatile than Hennessy Nerstone Mid. It trades about 0.28 of its potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.32 per unit of risk. If you would invest 2,251 in Lord Abbett Small on August 28, 2024 and sell it today you would earn a total of 226.00 from holding Lord Abbett Small or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lord Abbett Small vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Lord Abbett Small |
| Hennessy Nerstone Mid |
Lord Abbett and Hennessy Nerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Hennessy Nerstone
The main advantage of trading using opposite Lord Abbett and Hennessy Nerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Hennessy Nerstone 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 Hennessy Nerstone will offset losses from the drop in Hennessy Nerstone's long position.| Lord Abbett vs. Pace High Yield | Lord Abbett vs. Alliancebernstein Global High | Lord Abbett vs. Artisan High Income | Lord Abbett vs. Pace High Yield |
| Hennessy Nerstone vs. Hennessy Focus Fund | Hennessy Nerstone vs. Small Company Stock Fund | Hennessy Nerstone vs. Large Cap E | Hennessy Nerstone vs. Eventide Gilead 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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