Correlation Between California Municipal and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both California Municipal 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 California Municipal and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Municipal Portfolio and Lord Abbett Intermediate, you can compare the effects of market volatilities on California Municipal 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 California Municipal with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Municipal and Lord Abbett.
Diversification Opportunities for California Municipal and Lord Abbett
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Lord is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding California Municipal Portfolio and Lord Abbett Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Intermediate and California Municipal 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 California Municipal Portfolio 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 Intermediate has no effect on the direction of California Municipal i.e., California Municipal and Lord Abbett go up and down completely randomly.
Pair Corralation between California Municipal and Lord Abbett
Assuming the 90 days horizon California Municipal is expected to generate 2.03 times less return on investment than Lord Abbett. In addition to that, California Municipal is 1.02 times more volatile than Lord Abbett Intermediate. It trades about 0.18 of its total potential returns per unit of risk. Lord Abbett Intermediate is currently generating about 0.37 per unit of volatility. If you would invest 1,016 in Lord Abbett Intermediate on November 9, 2024 and sell it today you would earn a total of 12.00 from holding Lord Abbett Intermediate or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Municipal Portfolio vs. Lord Abbett Intermediate
Performance |
| Timeline |
| California Municipal |
| Lord Abbett Intermediate |
California Municipal and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Municipal and Lord Abbett
The main advantage of trading using opposite California Municipal and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Municipal 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.| California Municipal vs. Gold And Precious | California Municipal vs. Precious Metals And | California Municipal vs. Wells Fargo Advantage | California Municipal vs. Sprott Gold Equity |
| Lord Abbett vs. Wealthbuilder Moderate Balanced | Lord Abbett vs. Columbia Moderate Growth | Lord Abbett vs. Transamerica Cleartrack Retirement | Lord Abbett vs. Calvert Moderate Allocation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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