Correlation Between Lord Abbett and Transamerica Intermediate

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Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Transamerica Intermediate 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 Transamerica Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Alpha and Transamerica Intermediate Muni, you can compare the effects of market volatilities on Lord Abbett and Transamerica Intermediate 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 Transamerica Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Transamerica Intermediate.

Diversification Opportunities for Lord Abbett and Transamerica Intermediate

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lord and Transamerica is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LORD ABBETT ALPHA and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate 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 Alpha are associated (or correlated) with Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Lord Abbett i.e., Lord Abbett and Transamerica Intermediate go up and down completely randomly.

Pair Corralation between Lord Abbett and Transamerica Intermediate

Assuming the 90 days horizon Lord Abbett Alpha is expected to generate 6.39 times more return on investment than Transamerica Intermediate. However, Lord Abbett is 6.39 times more volatile than Transamerica Intermediate Muni. It trades about 0.18 of its potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about 0.07 per unit of risk. If you would invest  2,291  in Lord Abbett Alpha on December 29, 2023 and sell it today you would earn a total of  68.00  from holding Lord Abbett Alpha or generate 2.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

LORD ABBETT ALPHA  vs.  Transamerica Intermediate Muni

 Performance 
       Timeline  
Lord Abbett Alpha 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Alpha are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Transamerica Intermediate 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days Transamerica Intermediate Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett and Transamerica Intermediate Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lord Abbett and Transamerica Intermediate

The main advantage of trading using opposite Lord Abbett and Transamerica Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Transamerica Intermediate 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 Transamerica Intermediate will offset losses from the drop in Transamerica Intermediate's long position.
The idea behind Lord Abbett Alpha and Transamerica Intermediate Muni pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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