Correlation Between Mainstay Balanced and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Mainstay Balanced and Lord Abbett 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 Mainstay Balanced and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstay Balanced Fund and Lord Abbett Diversified, you can compare the effects of market volatilities on Mainstay Balanced and Lord Abbett 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 Mainstay Balanced with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstay Balanced and Lord Abbett.
Diversification Opportunities for Mainstay Balanced and Lord Abbett
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mainstay and Lord is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mainstay Balanced Fund and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified and Mainstay Balanced 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 Mainstay Balanced Fund are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Diversified has no effect on the direction of Mainstay Balanced i.e., Mainstay Balanced and Lord Abbett go up and down completely randomly.
Pair Corralation between Mainstay Balanced and Lord Abbett
Assuming the 90 days horizon Mainstay Balanced Fund is expected to under-perform the Lord Abbett. In addition to that, Mainstay Balanced is 3.38 times more volatile than Lord Abbett Diversified. It trades about -0.22 of its total potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.07 per unit of volatility. If you would invest 1,634 in Lord Abbett Diversified on September 14, 2024 and sell it today you would earn a total of 7.00 from holding Lord Abbett Diversified or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mainstay Balanced Fund vs. Lord Abbett Diversified
Performance |
| Timeline |
| Mainstay Balanced |
| Lord Abbett Diversified |
Mainstay Balanced and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstay Balanced and Lord Abbett
The main advantage of trading using opposite Mainstay Balanced and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstay Balanced position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.The idea behind Mainstay Balanced Fund and Lord Abbett Diversified pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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