Correlation Between American Beacon and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Large and Lord Abbett Affiliated, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Lord Abbett.
Diversification Opportunities for American Beacon and Lord Abbett
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Lord is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large and Lord Abbett Affiliated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Affiliated and American Beacon 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 American Beacon Large 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 Affiliated has no effect on the direction of American Beacon i.e., American Beacon and Lord Abbett go up and down completely randomly.
Pair Corralation between American Beacon and Lord Abbett
Assuming the 90 days horizon American Beacon Large is expected to generate 1.03 times more return on investment than Lord Abbett. However, American Beacon is 1.03 times more volatile than Lord Abbett Affiliated. It trades about 0.07 of its potential returns per unit of risk. Lord Abbett Affiliated is currently generating about 0.06 per unit of risk. If you would invest 2,237 in American Beacon Large on January 19, 2024 and sell it today you would earn a total of 41.00 from holding American Beacon Large or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Large vs. Lord Abbett Affiliated
Performance |
| Timeline |
| American Beacon Large |
| Lord Abbett Affiliated |
American Beacon and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Lord Abbett
The main advantage of trading using opposite American Beacon and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Dodge Cox Stock | American Beacon vs. American Funds American | American Beacon vs. American Funds American | American Beacon vs. American Mutual Fund |
| Lord Abbett vs. Dodge Cox Stock | Lord Abbett vs. American Funds American | Lord Abbett vs. American Funds American | Lord Abbett vs. American Mutual 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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