Correlation Between Power Dividend and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Power Dividend 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 Power Dividend and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Dividend Index and Lord Abbett Small, you can compare the effects of market volatilities on Power Dividend 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 Power Dividend with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Dividend and Lord Abbett.
Diversification Opportunities for Power Dividend and Lord Abbett
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Power and Lord is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Power Dividend Index and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Power Dividend 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 Power Dividend Index 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 Small has no effect on the direction of Power Dividend i.e., Power Dividend and Lord Abbett go up and down completely randomly.
Pair Corralation between Power Dividend and Lord Abbett
Assuming the 90 days horizon Power Dividend is expected to generate 2.34 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Power Dividend Index is 1.82 times less risky than Lord Abbett. It trades about 0.22 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,255 in Lord Abbett Small on September 5, 2024 and sell it today you would earn a total of 223.00 from holding Lord Abbett Small or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Power Dividend Index vs. Lord Abbett Small
Performance |
| Timeline |
| Power Dividend Index |
| Lord Abbett Small |
Power Dividend and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Dividend and Lord Abbett
The main advantage of trading using opposite Power Dividend and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Dividend 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.| Power Dividend vs. Lord Abbett Small | Power Dividend vs. Mid Cap Value Profund | Power Dividend vs. Queens Road Small | Power Dividend vs. Mutual Of America |
| Lord Abbett vs. Goehring Rozencwajg Resources | Lord Abbett vs. Fidelity Advisor Energy | Lord Abbett vs. Energy Basic Materials | Lord Abbett vs. Dreyfus Natural Resources |
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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