Correlation Between ATT and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Lord Abbett Core, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Lord Abbett.
Diversification Opportunities for ATT and Lord Abbett
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and Lord is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Lord Abbett Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Core and ATT 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 ATT Inc 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 Core has no effect on the direction of ATT i.e., ATT and Lord Abbett go up and down completely randomly.
Pair Corralation between ATT and Lord Abbett
Taking into account the 90-day investment horizon ATT Inc is expected to generate 2.57 times more return on investment than Lord Abbett. However, ATT is 2.57 times more volatile than Lord Abbett Core. It trades about 0.05 of its potential returns per unit of risk. Lord Abbett Core is currently generating about 0.04 per unit of risk. If you would invest 1,668 in ATT Inc on September 4, 2024 and sell it today you would earn a total of 602.00 from holding ATT Inc or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Lord Abbett Core
Performance |
| Timeline |
| ATT Inc |
| Lord Abbett Core |
ATT and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Lord Abbett
The main advantage of trading using opposite ATT and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and Lord Abbett Core pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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