Correlation Between College Retirement and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both College Retirement 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 College Retirement and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Lord Abbett Vertible, you can compare the effects of market volatilities on College Retirement 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 College Retirement with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Lord Abbett.
Diversification Opportunities for College Retirement and Lord Abbett
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between College and Lord is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Lord Abbett Vertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Vertible and College Retirement 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 College Retirement Equities 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 Vertible has no effect on the direction of College Retirement i.e., College Retirement and Lord Abbett go up and down completely randomly.
Pair Corralation between College Retirement and Lord Abbett
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 1.3 times more return on investment than Lord Abbett. However, College Retirement is 1.3 times more volatile than Lord Abbett Vertible. It trades about 0.09 of its potential returns per unit of risk. Lord Abbett Vertible is currently generating about 0.09 per unit of risk. If you would invest 26,433 in College Retirement Equities on October 16, 2024 and sell it today you would earn a total of 7,314 from holding College Retirement Equities or generate 27.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Lord Abbett Vertible
Performance |
| Timeline |
| College Retirement |
| Lord Abbett Vertible |
College Retirement and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Lord Abbett
The main advantage of trading using opposite College Retirement and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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.| College Retirement vs. Federated Hermes Conservative | College Retirement vs. Manning Napier Diversified | College Retirement vs. Victory Diversified Stock | College Retirement vs. Voya Solution Conservative |
| Lord Abbett vs. College Retirement Equities | Lord Abbett vs. Columbia Moderate Growth | Lord Abbett vs. Transamerica Cleartrack Retirement | Lord Abbett vs. Qs Moderate Growth |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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