Correlation Between Spirit Of and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Spirit Of 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 Spirit Of and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Of America and Lord Abbett Health, you can compare the effects of market volatilities on Spirit Of 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 Spirit Of with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Of and Lord Abbett.
Diversification Opportunities for Spirit Of and Lord Abbett
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spirit and Lord is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Of America 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 Spirit Of 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 Spirit Of America 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 Spirit Of i.e., Spirit Of and Lord Abbett go up and down completely randomly.
Pair Corralation between Spirit Of and Lord Abbett
Assuming the 90 days horizon Spirit Of America is expected to generate 0.97 times more return on investment than Lord Abbett. However, Spirit Of America is 1.04 times less risky than Lord Abbett. It trades about 0.12 of its potential returns per unit of risk. Lord Abbett Health is currently generating about 0.06 per unit of risk. If you would invest 2,929 in Spirit Of America on November 3, 2024 and sell it today you would earn a total of 432.00 from holding Spirit Of America or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Of America vs. Lord Abbett Health
Performance |
| Timeline |
| Spirit Of America |
| Lord Abbett Health |
Spirit Of and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Of and Lord Abbett
The main advantage of trading using opposite Spirit Of and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Of 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.| Spirit Of vs. Pnc International Growth | Spirit Of vs. T Rowe Price | Spirit Of vs. Upright Growth Income | Spirit Of vs. Tfa Alphagen Growth |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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