Correlation Between Lord Abbett and Extended Market
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Extended Market 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 Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on Lord Abbett and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Extended Market.
Diversification Opportunities for Lord Abbett and Extended Market
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and Extended is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Lord Abbett i.e., Lord Abbett and Extended Market go up and down completely randomly.
Pair Corralation between Lord Abbett and Extended Market
Assuming the 90 days horizon Lord Abbett Small is expected to generate 1.22 times more return on investment than Extended Market. However, Lord Abbett is 1.22 times more volatile than Extended Market Index. It trades about 0.19 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.18 per unit of risk. If you would invest 2,264 in Lord Abbett Small on August 29, 2024 and sell it today you would earn a total of 245.00 from holding Lord Abbett Small or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Lord Abbett Small vs. Extended Market Index
Performance |
| Timeline |
| Lord Abbett Small |
| Extended Market Index |
Lord Abbett and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Extended Market
The main advantage of trading using opposite Lord Abbett and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Us Small Cap | Lord Abbett vs. Us Targeted Value |
| Extended Market vs. Queens Road Small | Extended Market vs. Boston Partners Small | Extended Market vs. Hennessy Nerstone Mid | Extended Market vs. Lord Abbett Small |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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