Correlation Between Blackrock Mid-cap and Lord Abbett

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

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

Diversification Opportunities for Blackrock Mid-cap and Lord Abbett

0.46

Correlation Coefficient

Blackrock Mid-cap  Lord Abbett

Very weak diversification

The 3 months correlation between Blackrock and Lord is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Mid Cap Growth and Lord Abbett Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Bond and Blackrock Mid-cap 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 Blackrock Mid Cap Growth 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 Bond has no effect on the direction of Blackrock Mid-cap i.e., Blackrock Mid-cap and Lord Abbett go up and down completely randomly.

Pair Corralation between Blackrock Mid-cap and Lord Abbett

Assuming the 90 days horizon Blackrock Mid Cap Growth is expected to generate 5.5 times more return on investment than Lord Abbett. However, Blackrock Mid-cap is 5.5 times more volatile than Lord Abbett Bond. It trades about 0.25 of its potential returns per unit of risk. Lord Abbett Bond is currently generating about 0.12 per unit of risk. If you would invest  3,907  in Blackrock Mid Cap Growth on August 31, 2024 and sell it today you would earn a total of  703.00  from holding Blackrock Mid Cap Growth or generate 17.99% return on investment over 90 days.

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

Blackrock Mid Cap Growth  vs.  Lord Abbett Bond

Blackrock Mid Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Mid Cap Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Mid-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Bond

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Bond are ranked lower than 9 (%) 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 Blackrock Mid-cap and Lord Abbett

The main advantage of trading using opposite Blackrock Mid-cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Mid-cap 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 Blackrock Mid Cap Growth and Lord Abbett Bond 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.