Correlation Between Lord Abbett and Inverse Government

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

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

Diversification Opportunities for Lord Abbett and Inverse Government

0.0

Correlation Coefficient

Lord Abbett  Inverse Government

Pay attention - limited upside

The 3 months correlation between Lord and Inverse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Government and Inverse Government Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Government Long 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 Government are associated (or correlated) with Inverse Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Government Long has no effect on the direction of Lord Abbett i.e., Lord Abbett and Inverse Government go up and down completely randomly.

Pair Corralation between Lord Abbett and Inverse Government

If you would invest  14,220  in Inverse Government Long on February 7, 2024 and sell it today you would earn a total of  5,041  from holding Inverse Government Long or generate 35.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	25.45%
Values	Daily Returns

Lord Abbett Government  vs.  Inverse Government Long

Lord Abbett Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lord Abbett is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Inverse Government Long

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Government Long are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Inverse Government may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Lord Abbett and Inverse Government

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

The idea behind Lord Abbett Government and Inverse Government Long 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.