Correlation Between Lord Abbett and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Stone Ridge 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 Stone Ridge 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 Stone Ridge Diversified, you can compare the effects of market volatilities on Lord Abbett and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Stone Ridge.
Diversification Opportunities for Lord Abbett and Stone Ridge
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Stone is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Lord Abbett i.e., Lord Abbett and Stone Ridge go up and down completely randomly.
Pair Corralation between Lord Abbett and Stone Ridge
Assuming the 90 days horizon Lord Abbett Small is expected to generate 5.74 times more return on investment than Stone Ridge. However, Lord Abbett is 5.74 times more volatile than Stone Ridge Diversified. It trades about 0.1 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.23 per unit of risk. If you would invest 2,113 in Lord Abbett Small on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Lord Abbett Small or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Stone Ridge Diversified
Performance |
| Timeline |
| Lord Abbett Small |
| Stone Ridge Diversified |
Lord Abbett and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Stone Ridge
The main advantage of trading using opposite Lord Abbett and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Lord Abbett vs. Prudential Health Sciences | Lord Abbett vs. Hartford Healthcare Hls | Lord Abbett vs. Live Oak Health | Lord Abbett vs. Baron Health Care |
| Stone Ridge vs. T Rowe Price | Stone Ridge vs. Nationwide Growth Fund | Stone Ridge vs. Ab Small Cap | Stone Ridge vs. Kinetics Small Cap |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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