Correlation Between Third Avenue and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Third Avenue 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 Third Avenue and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Real and Lord Abbett Focused, you can compare the effects of market volatilities on Third Avenue 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 Third Avenue with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Lord Abbett.
Diversification Opportunities for Third Avenue and Lord Abbett
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Third and Lord is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Real and Lord Abbett Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Focused and Third Avenue 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 Third Avenue Real 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 Focused has no effect on the direction of Third Avenue i.e., Third Avenue and Lord Abbett go up and down completely randomly.
Pair Corralation between Third Avenue and Lord Abbett
Assuming the 90 days horizon Third Avenue is expected to generate 1.32 times less return on investment than Lord Abbett. In addition to that, Third Avenue is 1.83 times more volatile than Lord Abbett Focused. It trades about 0.14 of its total potential returns per unit of risk. Lord Abbett Focused is currently generating about 0.33 per unit of volatility. If you would invest 1,313 in Lord Abbett Focused on October 22, 2024 and sell it today you would earn a total of 44.00 from holding Lord Abbett Focused or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Real vs. Lord Abbett Focused
Performance |
| Timeline |
| Third Avenue Real |
| Lord Abbett Focused |
Third Avenue and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Lord Abbett
The main advantage of trading using opposite Third Avenue and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue 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.| Third Avenue vs. Smallcap Fund Fka | Third Avenue vs. Praxis Small Cap | Third Avenue vs. Ab Small Cap | Third Avenue vs. Touchstone Small Cap |
| Lord Abbett vs. Third Avenue Real | Lord Abbett vs. Tiaa Cref Real Estate | Lord Abbett vs. American Century Real | Lord Abbett vs. Simt Real Estate |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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