Correlation Between Western Asset and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Lord Abbett Health, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Lord Abbett.
Diversification Opportunities for Western Asset and Lord Abbett
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Lord is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High 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 Western Asset 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 Western Asset High 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 Western Asset i.e., Western Asset and Lord Abbett go up and down completely randomly.
Pair Corralation between Western Asset and Lord Abbett
Assuming the 90 days horizon Western Asset High is expected to generate 0.16 times more return on investment than Lord Abbett. However, Western Asset High is 6.11 times less risky than Lord Abbett. It trades about -0.02 of its potential returns per unit of risk. Lord Abbett Health is currently generating about -0.1 per unit of risk. If you would invest 700.00 in Western Asset High on September 22, 2024 and sell it today you would lose (1.00) from holding Western Asset High or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Lord Abbett Health
Performance |
| Timeline |
| Western Asset High |
| Lord Abbett Health |
Western Asset and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Lord Abbett
The main advantage of trading using opposite Western Asset and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Qs Large Cap | Western Asset vs. American Mutual Fund | Western Asset vs. Guidemark Large Cap | Western Asset vs. Jhancock Disciplined Value |
| Lord Abbett vs. Angel Oak Financial | Lord Abbett vs. Icon Financial Fund | Lord Abbett vs. Blackrock Financial Institutions | Lord Abbett vs. Goldman Sachs Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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