Correlation Between Lord Abbett and World Energy
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and World Energy 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 World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Ultra and World Energy Fund, you can compare the effects of market volatilities on Lord Abbett and World Energy 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 World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and World Energy.
Diversification Opportunities for Lord Abbett and World Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and World is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Ultra and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy 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 Ultra are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Lord Abbett i.e., Lord Abbett and World Energy go up and down completely randomly.
Pair Corralation between Lord Abbett and World Energy
Assuming the 90 days horizon Lord Abbett is expected to generate 85.08 times less return on investment than World Energy. But when comparing it to its historical volatility, Lord Abbett Ultra is 59.61 times less risky than World Energy. It trades about 0.22 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,405 in World Energy Fund on September 4, 2024 and sell it today you would earn a total of 123.00 from holding World Energy Fund or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Ultra vs. World Energy Fund
Performance |
| Timeline |
| Lord Abbett Ultra |
| World Energy |
Lord Abbett and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and World Energy
The main advantage of trading using opposite Lord Abbett and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Lord Abbett vs. World Energy Fund | Lord Abbett vs. Adams Natural Resources | Lord Abbett vs. Hennessy Bp Energy | Lord Abbett vs. Energy Basic Materials |
| World Energy vs. Vanguard Financials Index | World Energy vs. 1919 Financial Services | World Energy vs. Fidelity Advisor Financial | World Energy 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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