Correlation Between Davis Financial and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Davis Financial 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 Davis Financial and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Financial Fund and Lord Abbett Short, you can compare the effects of market volatilities on Davis Financial 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 Davis Financial with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Financial and Lord Abbett.
Diversification Opportunities for Davis Financial and Lord Abbett
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Davis and Lord is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Davis Financial 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 Davis Financial 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 Short has no effect on the direction of Davis Financial i.e., Davis Financial and Lord Abbett go up and down completely randomly.
Pair Corralation between Davis Financial and Lord Abbett
Assuming the 90 days horizon Davis Financial Fund is expected to generate 7.83 times more return on investment than Lord Abbett. However, Davis Financial is 7.83 times more volatile than Lord Abbett Short. It trades about 0.1 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.1 per unit of risk. If you would invest 6,055 in Davis Financial Fund on December 4, 2024 and sell it today you would earn a total of 792.00 from holding Davis Financial Fund or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Davis Financial Fund vs. Lord Abbett Short
Performance |
| Timeline |
| Davis Financial |
| Lord Abbett Short |
Davis Financial and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Financial and Lord Abbett
The main advantage of trading using opposite Davis Financial and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Financial 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.| Davis Financial vs. Guidemark E Fixed | Davis Financial vs. Touchstone Ultra Short | Davis Financial vs. Barings Active Short | Davis Financial vs. Ab Bond Inflation |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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