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 Diversified and Lord Abbett Bond, 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
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Lord is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Lord Abbett Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Bond 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 Diversified 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 Bond 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 is expected to generate 3.36 times less return on investment than Lord Abbett. In addition to that, Western Asset is 1.2 times more volatile than Lord Abbett Bond. It trades about 0.05 of its total potential returns per unit of risk. Lord Abbett Bond is currently generating about 0.22 per unit of volatility. If you would invest 717.00 in Lord Abbett Bond on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Lord Abbett Bond or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Lord Abbett Bond
Performance |
| Timeline |
| Western Asset Diversified |
| Lord Abbett Bond |
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. Davis Financial Fund | Western Asset vs. Prudential Jennison Financial | Western Asset vs. Mesirow Financial Small | Western Asset vs. Fidelity Advisor Financial |
| Lord Abbett vs. Adams Diversified Equity | Lord Abbett vs. Pioneer Diversified High | Lord Abbett vs. American Funds Conservative | Lord Abbett vs. Western Asset Diversified |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |