Correlation Between Federated Strategic and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Strategic 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 Federated Strategic and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Strategic Income and Lord Abbett Health, you can compare the effects of market volatilities on Federated Strategic 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 Federated Strategic with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Strategic and Lord Abbett.
Diversification Opportunities for Federated Strategic and Lord Abbett
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FEDERATED and Lord is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Federated Strategic Income 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 Federated Strategic 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 Federated Strategic Income 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 Federated Strategic i.e., Federated Strategic and Lord Abbett go up and down completely randomly.
Pair Corralation between Federated Strategic and Lord Abbett
Assuming the 90 days horizon Federated Strategic is expected to generate 1.65 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Federated Strategic Income is 4.2 times less risky than Lord Abbett. It trades about 0.16 of its potential returns per unit of risk. Lord Abbett Health is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,837 in Lord Abbett Health on September 1, 2024 and sell it today you would earn a total of 147.00 from holding Lord Abbett Health or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Strategic Income vs. Lord Abbett Health
Performance |
| Timeline |
| Federated Strategic |
| Lord Abbett Health |
Federated Strategic and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Strategic and Lord Abbett
The main advantage of trading using opposite Federated Strategic and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Strategic 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.| Federated Strategic vs. Lord Abbett Health | Federated Strategic vs. Live Oak Health | Federated Strategic vs. Alger Health Sciences | Federated Strategic vs. Blackrock Health Sciences |
| Lord Abbett vs. Enhanced Large Pany | Lord Abbett vs. Aqr Large Cap | Lord Abbett vs. T Rowe Price | Lord Abbett vs. Jhancock Disciplined Value |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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