Correlation Between Stellar and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Stellar 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 Stellar and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Lord Abbett Short, you can compare the effects of market volatilities on Stellar 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 Stellar with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Lord Abbett.
Diversification Opportunities for Stellar and Lord Abbett
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stellar and Lord is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Stellar 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 Stellar 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 Short has no effect on the direction of Stellar i.e., Stellar and Lord Abbett go up and down completely randomly.
Pair Corralation between Stellar and Lord Abbett
Assuming the 90 days trading horizon Stellar is expected to generate 46.39 times more return on investment than Lord Abbett. However, Stellar is 46.39 times more volatile than Lord Abbett Short. It trades about 0.01 of its potential returns per unit of risk. Lord Abbett Short is currently generating about -0.37 per unit of risk. If you would invest 44.00 in Stellar on October 10, 2024 and sell it today you would lose (2.00) from holding Stellar or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stellar vs. Lord Abbett Short
Performance |
| Timeline |
| Stellar |
| Lord Abbett Short |
Stellar and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Lord Abbett
The main advantage of trading using opposite Stellar and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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.The idea behind Stellar and Lord Abbett Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lord Abbett vs. Bbh Intermediate Municipal | Lord Abbett vs. Transamerica Intermediate Muni | Lord Abbett vs. Georgia Tax Free Bond | Lord Abbett vs. Dws Government Money |
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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