Correlation Between American Mutual and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both American Mutual 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 Mutual 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 Mutual Fund and Lord Abbett Affiliated, you can compare the effects of market volatilities on American Mutual 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 Mutual with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Lord Abbett.
Diversification Opportunities for American Mutual and Lord Abbett
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Lord is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund 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 Mutual 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 Mutual Fund 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 Mutual i.e., American Mutual and Lord Abbett go up and down completely randomly.
Pair Corralation between American Mutual and Lord Abbett
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Lord Abbett. In addition to that, American Mutual is 1.04 times more volatile than Lord Abbett Affiliated. It trades about -0.31 of its total potential returns per unit of risk. Lord Abbett Affiliated is currently generating about -0.31 per unit of volatility. If you would invest 1,845 in Lord Abbett Affiliated on January 21, 2024 and sell it today you would lose (71.00) from holding Lord Abbett Affiliated or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Mutual Fund vs. Lord Abbett Affiliated
Performance |
| Timeline |
| American Mutual |
| Lord Abbett Affiliated |
American Mutual and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Lord Abbett
The main advantage of trading using opposite American Mutual and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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 Mutual vs. American Funds Fundamental | American Mutual vs. Amcap Fund Class | American Mutual vs. New Perspective Fund | American Mutual vs. American Balanced Fund |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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