Correlation Between Lord Abbett and Northern Small
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on Lord Abbett and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Northern Small.
Diversification Opportunities for Lord Abbett and Northern Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and Northern is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap 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 Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Lord Abbett i.e., Lord Abbett and Northern Small go up and down completely randomly.
Pair Corralation between Lord Abbett and Northern Small
Assuming the 90 days horizon Lord Abbett Small is expected to generate 0.95 times more return on investment than Northern Small. However, Lord Abbett Small is 1.06 times less risky than Northern Small. It trades about 0.06 of its potential returns per unit of risk. Northern Small Cap is currently generating about 0.05 per unit of risk. If you would invest 1,774 in Lord Abbett Small on August 26, 2024 and sell it today you would earn a total of 659.00 from holding Lord Abbett Small or generate 37.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Northern Small Cap
Performance |
| Timeline |
| Lord Abbett Small |
| Northern Small Cap |
Lord Abbett and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Northern Small
The main advantage of trading using opposite Lord Abbett and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small'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 |
| Northern Small vs. American Beacon Large | Northern Small vs. Harbor International Fund | Northern Small vs. Credit Suisse Modity | Northern Small vs. Metropolitan West Total |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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