Correlation Between Metropolitan West and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Lord Abbett Inflation, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Lord Abbett.
Diversification Opportunities for Metropolitan West and Lord Abbett
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and Lord is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Lord Abbett Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Inflation and Metropolitan West 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 Metropolitan West High 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 Inflation has no effect on the direction of Metropolitan West i.e., Metropolitan West and Lord Abbett go up and down completely randomly.
Pair Corralation between Metropolitan West and Lord Abbett
Assuming the 90 days horizon Metropolitan West is expected to generate 1.1 times less return on investment than Lord Abbett. In addition to that, Metropolitan West is 1.22 times more volatile than Lord Abbett Inflation. It trades about 0.14 of its total potential returns per unit of risk. Lord Abbett Inflation is currently generating about 0.19 per unit of volatility. If you would invest 1,086 in Lord Abbett Inflation on November 8, 2024 and sell it today you would earn a total of 84.00 from holding Lord Abbett Inflation or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Lord Abbett Inflation
Performance |
| Timeline |
| Metropolitan West High |
| Lord Abbett Inflation |
Metropolitan West and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Lord Abbett
The main advantage of trading using opposite Metropolitan West and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High | Metropolitan West vs. Metropolitan West Total |
| Lord Abbett vs. Siit Ultra Short | Lord Abbett vs. Nuveen Short Term | Lord Abbett vs. Oakhurst Short Duration | Lord Abbett vs. Fidelity Flex Servative |
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 CEOs Directory module to screen CEOs from public companies around the world.
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