Correlation Between Ab Impact and Lord Abbett

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

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

Diversification Opportunities for Ab Impact and Lord Abbett

0.88

Correlation Coefficient

Ab Impact  Lord Abbett

Very poor diversification

The 3 months correlation between ABIMX and Lord is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Lord Abbett High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett High and Ab Impact 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 Ab Impact Municipal 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 High has no effect on the direction of Ab Impact i.e., Ab Impact and Lord Abbett go up and down completely randomly.

Pair Corralation between Ab Impact and Lord Abbett

Assuming the 90 days horizon Ab Impact is expected to generate 1.06 times less return on investment than Lord Abbett. In addition to that, Ab Impact is 1.17 times more volatile than Lord Abbett High. It trades about 0.08 of its total potential returns per unit of risk. Lord Abbett High is currently generating about 0.1 per unit of volatility. If you would invest  1,012  in Lord Abbett High on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Lord Abbett High or generate 9.98% return on investment over 90 days.

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

Ab Impact Municipal  vs.  Lord Abbett High

Ab Impact Municipal

Risk-Adjusted Performance

1 of 100

Weak

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

Lord Abbett High

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett High are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Ab Impact and Lord Abbett

The main advantage of trading using opposite Ab Impact and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact 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 Ab Impact Municipal and Lord Abbett High 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.