Correlation Between Sierra Core and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Sierra Core 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 Sierra Core and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra E Retirement and Lord Abbett Small, you can compare the effects of market volatilities on Sierra Core 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 Sierra Core with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Lord Abbett.
Diversification Opportunities for Sierra Core and Lord Abbett
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sierra and Lord is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Sierra Core 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 Sierra E Retirement 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 Small has no effect on the direction of Sierra Core i.e., Sierra Core and Lord Abbett go up and down completely randomly.
Pair Corralation between Sierra Core and Lord Abbett
Assuming the 90 days horizon Sierra E Retirement is expected to generate 0.26 times more return on investment than Lord Abbett. However, Sierra E Retirement is 3.84 times less risky than Lord Abbett. It trades about -0.19 of its potential returns per unit of risk. Lord Abbett Small is currently generating about -0.3 per unit of risk. If you would invest 2,321 in Sierra E Retirement on October 11, 2024 and sell it today you would lose (52.00) from holding Sierra E Retirement or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sierra E Retirement vs. Lord Abbett Small
Performance |
| Timeline |
| Sierra E Retirement |
| Lord Abbett Small |
Sierra Core and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Core and Lord Abbett
The main advantage of trading using opposite Sierra Core and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Core 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.| Sierra Core vs. Tortoise Energy Independence | Sierra Core vs. World Energy Fund | Sierra Core vs. Clearbridge Energy Mlp | Sierra Core vs. Blackrock All Cap Energy |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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