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 Total and Lord Abbett Core, 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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metropolitan and Lord is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Lord Abbett Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Core 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 Total 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 Core 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 1.82 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Metropolitan West Total is 1.25 times less risky than Lord Abbett. It trades about 0.03 of its potential returns per unit of risk. Lord Abbett Core is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,173 in Lord Abbett Core on September 4, 2024 and sell it today you would earn a total of 123.00 from holding Lord Abbett Core or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. Lord Abbett Core
Performance |
| Timeline |
| Metropolitan West Total |
| Lord Abbett Core |
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. Loomis Sayles Bond | Metropolitan West vs. Doubleline Total Return | Metropolitan West vs. Baird E Plus | Metropolitan West vs. Harbor International Fund |
| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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