Correlation Between Lord Abbett and Evolus

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Evolus 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 Evolus 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 Evolus Inc, you can compare the effects of market volatilities on Lord Abbett and Evolus 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 Evolus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Evolus.

Diversification Opportunities for Lord Abbett and Evolus

0.36

Correlation Coefficient

Lord Abbett  Evolus

Weak diversification

The 3 months correlation between Lord and Evolus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Affiliated and Evolus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolus Inc 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 Evolus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolus Inc has no effect on the direction of Lord Abbett i.e., Lord Abbett and Evolus go up and down completely randomly.

Pair Corralation between Lord Abbett and Evolus

Assuming the 90 days horizon Lord Abbett is expected to generate 1.48 times less return on investment than Evolus. But when comparing it to its historical volatility, Lord Abbett Affiliated is 4.06 times less risky than Evolus. It trades about 0.06 of its potential returns per unit of risk. Evolus Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,183  in Evolus Inc on March 6, 2024 and sell it today you would earn a total of  103.00  from holding Evolus Inc or generate 8.71% return on investment over 90 days.

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

Lord Abbett Affiliated  vs.  Evolus Inc

Lord Abbett Affiliated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Affiliated are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Evolus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lord Abbett and Evolus

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

The idea behind Lord Abbett Affiliated and Evolus Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.