Correlation Between Lord Abbett and Aqr Equity
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Aqr Equity 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 Aqr Equity 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 Aqr Equity Market, you can compare the effects of market volatilities on Lord Abbett and Aqr Equity 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 Aqr Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Aqr Equity.
Diversification Opportunities for Lord Abbett and Aqr Equity
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Aqr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Aqr Equity Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Equity Market 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 Aqr Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Equity Market has no effect on the direction of Lord Abbett i.e., Lord Abbett and Aqr Equity go up and down completely randomly.
Pair Corralation between Lord Abbett and Aqr Equity
Assuming the 90 days horizon Lord Abbett Small is expected to generate 2.87 times more return on investment than Aqr Equity. However, Lord Abbett is 2.87 times more volatile than Aqr Equity Market. It trades about 0.1 of its potential returns per unit of risk. Aqr Equity Market is currently generating about 0.18 per unit of risk. If you would invest 1,905 in Lord Abbett Small on September 4, 2024 and sell it today you would earn a total of 578.00 from holding Lord Abbett Small or generate 30.34% 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. Aqr Equity Market
Performance |
| Timeline |
| Lord Abbett Small |
| Aqr Equity Market |
Lord Abbett and Aqr Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Aqr Equity
The main advantage of trading using opposite Lord Abbett and Aqr Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Aqr Equity 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 Aqr Equity will offset losses from the drop in Aqr Equity's long position.| Lord Abbett vs. Ancorathelen Small Mid Cap | Lord Abbett vs. Champlain Small | Lord Abbett vs. The Hartford Small | Lord Abbett vs. Oklahoma College Savings |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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