Correlation Between Union Pacific and Lord Abbett

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

By analyzing existing cross correlation between Union Pacific and Lord Abbett Mid, you can compare the effects of market volatilities on Union Pacific 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 Union Pacific with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Pacific and Lord Abbett.

Diversification Opportunities for Union Pacific and Lord Abbett

0.0

Correlation Coefficient

Union Pacific  Lord Abbett

Pay attention - limited upside

The 3 months correlation between Union and Lord is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Union Pacific and Lord Abbett Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Mid and Union Pacific 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 Union Pacific 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 Mid has no effect on the direction of Union Pacific i.e., Union Pacific and Lord Abbett go up and down completely randomly.

Pair Corralation between Union Pacific and Lord Abbett

If you would invest  0.00  in Lord Abbett Mid on January 18, 2024 and sell it today you would earn a total of  0.00  from holding Lord Abbett Mid or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Union Pacific  vs.  Lord Abbett Mid

Union Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Union Pacific is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Lord Abbett Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Mid 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Union Pacific and Lord Abbett

The main advantage of trading using opposite Union Pacific and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pacific 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.

The idea behind Union Pacific and Lord Abbett Mid 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.