Correlation Between Lord Abbett and American Beacon
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Beacon 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 Lord Abbett and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Affiliated and American Beacon Large, you can compare the effects of market volatilities on Lord Abbett and American Beacon 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 Lord Abbett with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Beacon.
Diversification Opportunities for Lord Abbett and American Beacon
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Affiliated and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Lord Abbett 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 Lord Abbett Affiliated are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Large has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Beacon go up and down completely randomly.
Pair Corralation between Lord Abbett and American Beacon
Assuming the 90 days horizon Lord Abbett Affiliated is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Affiliated is 1.14 times less risky than American Beacon. The mutual fund trades about -0.26 of its potential returns per unit of risk. The American Beacon Large is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 2,355 in American Beacon Large on January 20, 2024 and sell it today you would lose (77.00) from holding American Beacon Large or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Affiliated vs. American Beacon Large
Performance |
| Timeline |
| Lord Abbett Affiliated |
| American Beacon Large |
Lord Abbett and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Beacon
The main advantage of trading using opposite Lord Abbett and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| American Beacon vs. Northern Small Cap | American Beacon vs. Ssga International Stock | American Beacon vs. American Beacon International | American Beacon vs. Perkins Mid Cap |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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