Correlation Between Strategic Income and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Strategic Income 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 Strategic Income and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Income Opportunities and Lord Abbett Bond, you can compare the effects of market volatilities on Strategic Income 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 Strategic Income with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Income and Lord Abbett.
Diversification Opportunities for Strategic Income and Lord Abbett
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategic and Lord is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Income Opportunities 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 Strategic Income 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 Strategic Income Opportunities 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 Strategic Income i.e., Strategic Income and Lord Abbett go up and down completely randomly.
Pair Corralation between Strategic Income and Lord Abbett
Assuming the 90 days horizon Strategic Income Opportunities is expected to under-perform the Lord Abbett. In addition to that, Strategic Income is 1.06 times more volatile than Lord Abbett Bond. It trades about -0.22 of its total potential returns per unit of risk. Lord Abbett Bond is currently generating about -0.12 per unit of volatility. If you would invest 699.00 in Lord Abbett Bond on January 19, 2024 and sell it today you would lose (5.00) from holding Lord Abbett Bond or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Income Opportunities vs. Lord Abbett Bond
Performance |
| Timeline |
| Strategic Me Opportu |
| Lord Abbett Bond |
Strategic Income and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Income and Lord Abbett
The main advantage of trading using opposite Strategic Income and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Income 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.| Strategic Income vs. HUMANA INC | Strategic Income vs. Aquagold International | Strategic Income vs. Thrivent High Yield | Strategic Income vs. Morningstar Unconstrained Allocation |
| Lord Abbett vs. HUMANA INC | Lord Abbett vs. Aquagold International | Lord Abbett vs. Thrivent High Yield | Lord Abbett vs. Morningstar Unconstrained Allocation |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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