Correlation Between State Street and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Smallmid and Lord Abbett Small, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Lord Abbett.
Diversification Opportunities for State Street and Lord Abbett
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Lord is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding State Street Smallmid 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 State Street 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 State Street Smallmid 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 State Street i.e., State Street and Lord Abbett go up and down completely randomly.
Pair Corralation between State Street and Lord Abbett
Assuming the 90 days horizon State Street Smallmid is expected to generate 0.8 times more return on investment than Lord Abbett. However, State Street Smallmid is 1.24 times less risky than Lord Abbett. It trades about 0.37 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.28 per unit of risk. If you would invest 29,873 in State Street Smallmid on September 5, 2024 and sell it today you would earn a total of 3,267 from holding State Street Smallmid or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
State Street Smallmid vs. Lord Abbett Small
Performance |
| Timeline |
| State Street Smallmid |
| Lord Abbett Small |
State Street and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Lord Abbett
The main advantage of trading using opposite State Street and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Multimanager Lifestyle Aggressive | State Street vs. Ab Global Risk | State Street vs. Artisan High Income | State Street vs. Morningstar Aggressive Growth |
| Lord Abbett vs. Goehring Rozencwajg Resources | Lord Abbett vs. Fidelity Advisor Energy | Lord Abbett vs. Energy Basic Materials | Lord Abbett vs. Dreyfus Natural Resources |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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