Correlation Between Energy Basic and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Lord Abbett Balanced, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Lord Abbett.
Diversification Opportunities for Energy Basic and Lord Abbett
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and LORD is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Lord Abbett Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Balanced and Energy Basic 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 Energy Basic Materials 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 Balanced has no effect on the direction of Energy Basic i.e., Energy Basic and Lord Abbett go up and down completely randomly.
Pair Corralation between Energy Basic and Lord Abbett
Assuming the 90 days horizon Energy Basic is expected to generate 2.26 times less return on investment than Lord Abbett. In addition to that, Energy Basic is 1.96 times more volatile than Lord Abbett Balanced. It trades about 0.03 of its total potential returns per unit of risk. Lord Abbett Balanced is currently generating about 0.14 per unit of volatility. If you would invest 992.00 in Lord Abbett Balanced on August 31, 2024 and sell it today you would earn a total of 277.00 from holding Lord Abbett Balanced or generate 27.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Energy Basic Materials vs. Lord Abbett Balanced
Performance |
| Timeline |
| Energy Basic Materials |
| Lord Abbett Balanced |
Energy Basic and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Basic and Lord Abbett
The main advantage of trading using opposite Energy Basic and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.| Energy Basic vs. Aqr Large Cap | Energy Basic vs. Tax Managed Large Cap | Energy Basic vs. T Rowe Price | Energy Basic vs. Dana Large Cap |
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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 Stocks Directory module to find actively traded stocks across global markets.
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