Correlation Between Blackrock Inflation and Lord Abbett

Can any of the company-specific risk be diversified away by investing in both Blackrock Inflation 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 Inflation 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 Inflation Protected and Lord Abbett Value, you can compare the effects of market volatilities on Blackrock Inflation 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 Inflation with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Inflation and Lord Abbett.

Diversification Opportunities for Blackrock Inflation and Lord Abbett

-0.55

Correlation Coefficient

Blackrock Inflation  Lord Abbett

Excellent diversification

The 3 months correlation between Blackrock and Lord is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Inflation Protected and Lord Abbett Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Value and Blackrock Inflation 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 Inflation Protected 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 Value has no effect on the direction of Blackrock Inflation i.e., Blackrock Inflation and Lord Abbett go up and down completely randomly.

Pair Corralation between Blackrock Inflation and Lord Abbett

Assuming the 90 days horizon Blackrock Inflation is expected to generate 4.7 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Blackrock Inflation Protected is 2.81 times less risky than Lord Abbett. It trades about 0.03 of its potential returns per unit of risk. Lord Abbett Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,582  in Lord Abbett Value on September 2, 2024 and sell it today you would earn a total of  459.00  from holding Lord Abbett Value or generate 29.01% return on investment over 90 days.

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

Blackrock Inflation Protected  vs.  Lord Abbett Value

Blackrock Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lord Abbett Value

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Value 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Inflation and Lord Abbett

The main advantage of trading using opposite Blackrock Inflation and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Inflation 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 Inflation Protected and Lord Abbett Value 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.