Correlation Between Vanguard Extended and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Vanguard Extended and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Lord Abbett Health, you can compare the effects of market volatilities on Vanguard Extended 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 Vanguard Extended with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Lord Abbett.
Diversification Opportunities for Vanguard Extended and Lord Abbett
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vanguard and Lord is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market 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 Vanguard Extended 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 Vanguard Extended Market 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 Vanguard Extended i.e., Vanguard Extended and Lord Abbett go up and down completely randomly.
Pair Corralation between Vanguard Extended and Lord Abbett
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.13 times more return on investment than Lord Abbett. However, Vanguard Extended is 1.13 times more volatile than Lord Abbett Health. It trades about 0.3 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.02 per unit of risk. If you would invest 22,353 in Vanguard Extended Market on August 24, 2024 and sell it today you would earn a total of 2,031 from holding Vanguard Extended Market or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Lord Abbett Health
Performance |
| Timeline |
| Vanguard Extended Market |
| Lord Abbett Health |
Vanguard Extended and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Lord Abbett
The main advantage of trading using opposite Vanguard Extended and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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.| Vanguard Extended vs. Lord Abbett Health | Vanguard Extended vs. Eventide Healthcare Life | Vanguard Extended vs. Prudential Health Sciences | Vanguard Extended vs. Allianzgi Health Sciences |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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