Correlation Between Lord Abbett and Global Technology
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Global Technology 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 Global Technology 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 Global Technology Portfolio, you can compare the effects of market volatilities on Lord Abbett and Global Technology 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 Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Global Technology.
Diversification Opportunities for Lord Abbett and Global Technology
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology 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 Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Lord Abbett i.e., Lord Abbett and Global Technology go up and down completely randomly.
Pair Corralation between Lord Abbett and Global Technology
Assuming the 90 days horizon Lord Abbett is expected to generate 1.91 times less return on investment than Global Technology. But when comparing it to its historical volatility, Lord Abbett Small is 1.3 times less risky than Global Technology. It trades about 0.06 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,149 in Global Technology Portfolio on September 14, 2024 and sell it today you would earn a total of 41.00 from holding Global Technology Portfolio or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Global Technology Portfolio
Performance |
| Timeline |
| Lord Abbett Small |
| Global Technology |
Lord Abbett and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Global Technology
The main advantage of trading using opposite Lord Abbett and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Lord Abbett vs. Touchstone Large Cap | Lord Abbett vs. Upright Assets Allocation | Lord Abbett vs. Fm Investments Large | Lord Abbett vs. Aqr Large Cap |
| Global Technology vs. Ftfa Franklin Templeton Growth | Global Technology vs. Vy Baron Growth | Global Technology vs. Qs Defensive Growth | Global Technology vs. L Abbett 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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