Correlation Between Bayview Acquisition and Lord Abbett

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

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

Diversification Opportunities for Bayview Acquisition and Lord Abbett

0.09

Correlation Coefficient

Bayview Acquisition  Lord Abbett

Significant diversification

The 3 months correlation between Bayview and Lord is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Bayview Acquisition 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 Bayview Acquisition Corp 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 Short has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Lord Abbett go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Lord Abbett

Assuming the 90 days horizon Bayview Acquisition Corp is expected to generate 3.64 times more return on investment than Lord Abbett. However, Bayview Acquisition is 3.64 times more volatile than Lord Abbett Short. It trades about 0.08 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.06 per unit of risk. If you would invest  1,052  in Bayview Acquisition Corp on September 3, 2024 and sell it today you would earn a total of  28.00  from holding Bayview Acquisition Corp or generate 2.66% return on investment over 90 days.

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

Bayview Acquisition Corp  vs.  Lord Abbett Short

Bayview Acquisition Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bayview Acquisition Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bayview Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lord Abbett Short

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 4 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bayview Acquisition and Lord Abbett

The main advantage of trading using opposite Bayview Acquisition and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayview Acquisition 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 Bayview Acquisition Corp and Lord Abbett Short 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.