Correlation Between Thornburg Value and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Thornburg Value 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 Thornburg Value and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg Value Fund and Lord Abbett Convertible, you can compare the effects of market volatilities on Thornburg Value 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 Thornburg Value with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Value and Lord Abbett.
Diversification Opportunities for Thornburg Value and Lord Abbett
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thornburg and Lord is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Value Fund and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Thornburg Value 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 Thornburg Value Fund 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 Convertible has no effect on the direction of Thornburg Value i.e., Thornburg Value and Lord Abbett go up and down completely randomly.
Pair Corralation between Thornburg Value and Lord Abbett
Assuming the 90 days horizon Thornburg Value Fund is expected to generate 1.35 times more return on investment than Lord Abbett. However, Thornburg Value is 1.35 times more volatile than Lord Abbett Convertible. It trades about 0.18 of its potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.16 per unit of risk. If you would invest 7,949 in Thornburg Value Fund on October 20, 2024 and sell it today you would earn a total of 262.00 from holding Thornburg Value Fund or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg Value Fund vs. Lord Abbett Convertible
Performance |
| Timeline |
| Thornburg Value |
| Lord Abbett Convertible |
Thornburg Value and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg Value and Lord Abbett
The main advantage of trading using opposite Thornburg Value and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Value 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.| Thornburg Value vs. Thornburg Value Fund | Thornburg Value vs. Thornburg International Value | Thornburg Value vs. Thornburg International Value | Thornburg Value vs. Thornburg International Value |
| Lord Abbett vs. Large Cap Growth Profund | Lord Abbett vs. Calvert Large Cap | Lord Abbett vs. Guidemark Large Cap | Lord Abbett vs. Fisher Large Cap |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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