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 Short, 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
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Lord is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified 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 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 Short 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 Diversified is expected to under-perform the Lord Abbett. In addition to that, Western Asset is 1.62 times more volatile than Lord Abbett Short. It trades about -0.02 of its total potential returns per unit of risk. Lord Abbett Short is currently generating about 0.12 per unit of volatility. If you would invest 377.00 in Lord Abbett Short on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Lord Abbett Short or generate 2.65% 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 Short
Performance |
| Timeline |
| Western Asset Diversified |
| Lord Abbett Short |
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. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |