Correlation Between Spectrum Advisors and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Spectrum Advisors 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 Spectrum Advisors and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Advisors Preferred and Lord Abbett Health, you can compare the effects of market volatilities on Spectrum Advisors 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 Spectrum Advisors with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Advisors and Lord Abbett.
Diversification Opportunities for Spectrum Advisors and Lord Abbett
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spectrum and Lord is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Advisors Preferred and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and Spectrum Advisors 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 Spectrum Advisors Preferred 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 Health has no effect on the direction of Spectrum Advisors i.e., Spectrum Advisors and Lord Abbett go up and down completely randomly.
Pair Corralation between Spectrum Advisors and Lord Abbett
Assuming the 90 days horizon Spectrum Advisors Preferred is expected to generate 0.51 times more return on investment than Lord Abbett. However, Spectrum Advisors Preferred is 1.95 times less risky than Lord Abbett. It trades about 0.19 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.1 per unit of risk. If you would invest 1,825 in Spectrum Advisors Preferred on September 14, 2024 and sell it today you would earn a total of 42.00 from holding Spectrum Advisors Preferred or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Advisors Preferred vs. Lord Abbett Health
Performance |
| Timeline |
| Spectrum Advisors |
| Lord Abbett Health |
Spectrum Advisors and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Advisors and Lord Abbett
The main advantage of trading using opposite Spectrum Advisors and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Advisors 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.| Spectrum Advisors vs. Lord Abbett Health | Spectrum Advisors vs. Eventide Healthcare Life | Spectrum Advisors vs. Baron Health Care | Spectrum Advisors vs. Invesco Global Health |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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