Correlation Between Lord Abbett and Columbia Dividend

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Columbia Dividend 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 Columbia Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lord Abbett Fundamental and Columbia Dividend Income, you can compare the effects of market volatilities on Lord Abbett and Columbia Dividend 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 Columbia Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Columbia Dividend.

Diversification Opportunities for Lord Abbett and Columbia Dividend

0.97

Correlation Coefficient

Lord Abbett  Columbia Dividend

Almost no diversification

The 3 months correlation between Lord and Columbia is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Fundamental and Columbia Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Dividend 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 Fundamental are associated (or correlated) with Columbia Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Dividend has no effect on the direction of Lord Abbett i.e., Lord Abbett and Columbia Dividend go up and down completely randomly.

Pair Corralation between Lord Abbett and Columbia Dividend

Assuming the 90 days horizon Lord Abbett Fundamental is expected to generate 1.13 times more return on investment than Columbia Dividend. However, Lord Abbett is 1.13 times more volatile than Columbia Dividend Income. It trades about 0.08 of its potential returns per unit of risk. Columbia Dividend Income is currently generating about 0.08 per unit of risk. If you would invest  915.00  in Lord Abbett Fundamental on January 19, 2024 and sell it today you would earn a total of  302.00  from holding Lord Abbett Fundamental or generate 33.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Lord Abbett Fundamental  vs.  Columbia Dividend Income

Lord Abbett Fundamental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Fundamental are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Columbia Dividend

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Dividend Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Columbia Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lord Abbett and Columbia Dividend

The main advantage of trading using opposite Lord Abbett and Columbia Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Columbia Dividend 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 Columbia Dividend will offset losses from the drop in Columbia Dividend's long position.

The idea behind Lord Abbett Fundamental and Columbia Dividend Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.