Correlation Between General American and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both General American 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 General American and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General American Investors and Lord Abbett Short, you can compare the effects of market volatilities on General American 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 General American with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of General American and Lord Abbett.
Diversification Opportunities for General American and Lord Abbett
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Lord is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors 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 General American 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 General American Investors 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 General American i.e., General American and Lord Abbett go up and down completely randomly.
Pair Corralation between General American and Lord Abbett
Assuming the 90 days horizon General American Investors is expected to generate 5.48 times more return on investment than Lord Abbett. However, General American is 5.48 times more volatile than Lord Abbett Short. It trades about 0.04 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.04 per unit of risk. If you would invest 4,716 in General American Investors on January 17, 2024 and sell it today you would earn a total of 880.00 from holding General American Investors or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
General American Investors vs. Lord Abbett Short
Performance |
| Timeline |
| General American Inv |
| Lord Abbett Short |
General American and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General American and Lord Abbett
The main advantage of trading using opposite General American and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American 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.| General American vs. Vanguard Total Stock | General American vs. Vanguard 500 Index | General American vs. Vanguard Total Stock | General American vs. Vanguard Total Stock |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |