Correlation Between Valic Company and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Valic Company 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 Valic Company and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and Lord Abbett Convertible, you can compare the effects of market volatilities on Valic Company 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 Valic Company with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and Lord Abbett.
Diversification Opportunities for Valic Company and Lord Abbett
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valic and Lord is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I 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 Valic Company 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 Valic Company I 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 Valic Company i.e., Valic Company and Lord Abbett go up and down completely randomly.
Pair Corralation between Valic Company and Lord Abbett
Assuming the 90 days horizon Valic Company is expected to generate 3.18 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Valic Company I is 1.48 times less risky than Lord Abbett. It trades about 0.07 of its potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,319 in Lord Abbett Convertible on October 26, 2024 and sell it today you would earn a total of 164.00 from holding Lord Abbett Convertible or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. Lord Abbett Convertible
Performance |
| Timeline |
| Valic Company I |
| Lord Abbett Convertible |
Valic Company and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and Lord Abbett
The main advantage of trading using opposite Valic Company and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company 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.| Valic Company vs. Metropolitan West High | Valic Company vs. Needham Aggressive Growth | Valic Company vs. Mesirow Financial High | Valic Company vs. Virtus High Yield |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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