Correlation Between Lord Abbett and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Highland Longshort 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 Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Short and Highland Longshort Healthcare, you can compare the effects of market volatilities on Lord Abbett and Highland Longshort 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 Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Highland Longshort.
Diversification Opportunities for Lord Abbett and Highland Longshort
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lord and Highland is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Short and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort 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 Short are associated (or correlated) with Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of Lord Abbett i.e., Lord Abbett and Highland Longshort go up and down completely randomly.
Pair Corralation between Lord Abbett and Highland Longshort
Assuming the 90 days horizon Lord Abbett is expected to generate 3.0 times less return on investment than Highland Longshort. But when comparing it to its historical volatility, Lord Abbett Short is 1.38 times less risky than Highland Longshort. It trades about 0.13 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,642 in Highland Longshort Healthcare on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Highland Longshort Healthcare or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Short vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Lord Abbett Short |
| Highland Longshort |
Lord Abbett and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Highland Longshort
The main advantage of trading using opposite Lord Abbett and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Highland Longshort 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 Highland Longshort will offset losses from the drop in Highland Longshort's long position.| Lord Abbett vs. Siit Emerging Markets | Lord Abbett vs. Barings Active Short | Lord Abbett vs. Vanguard Developed Markets | Lord Abbett vs. Old Westbury Short Term |
| Highland Longshort vs. Putnam Global Financials | Highland Longshort vs. Fidelity Advisor Financial | Highland Longshort vs. 1919 Financial Services | Highland Longshort vs. Blackrock Financial Institutions |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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