Correlation Between Government Long and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Government Long 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 Government Long and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Long Bond and Lord Abbett Convertible, you can compare the effects of market volatilities on Government Long 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 Government Long with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Long and Lord Abbett.
Diversification Opportunities for Government Long and Lord Abbett
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Government and Lord is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Government Long Bond and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Government Long 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 Government Long Bond 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 Convertible has no effect on the direction of Government Long i.e., Government Long and Lord Abbett go up and down completely randomly.
Pair Corralation between Government Long and Lord Abbett
Assuming the 90 days horizon Government Long Bond is expected to under-perform the Lord Abbett. In addition to that, Government Long is 2.13 times more volatile than Lord Abbett Convertible. It trades about -0.09 of its total potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.37 per unit of volatility. If you would invest 1,337 in Lord Abbett Convertible on September 3, 2024 and sell it today you would earn a total of 156.00 from holding Lord Abbett Convertible or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Long Bond vs. Lord Abbett Convertible
Performance |
| Timeline |
| Government Long Bond |
| Lord Abbett Convertible |
Government Long and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Long and Lord Abbett
The main advantage of trading using opposite Government Long and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Long 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.| Government Long vs. Virtus Convertible | Government Long vs. Rationalpier 88 Convertible | Government Long vs. Allianzgi Convertible Income | Government Long vs. Gabelli Convertible And |
| Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Franklin Vertible Securities | Lord Abbett vs. Allianzgi Vertible Fund | Lord Abbett vs. Virtus Convertible |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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