Correlation Between Caldwell Orkin and Lord Abbett

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

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

Diversification Opportunities for Caldwell Orkin and Lord Abbett

0.76

Correlation Coefficient

Caldwell Orkin  Lord Abbett

Poor diversification

The 3 months correlation between Caldwell and Lord is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Orkin Market and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified and Caldwell Orkin 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 Caldwell Orkin Market 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 Diversified has no effect on the direction of Caldwell Orkin i.e., Caldwell Orkin and Lord Abbett go up and down completely randomly.

Pair Corralation between Caldwell Orkin and Lord Abbett

Assuming the 90 days horizon Caldwell Orkin Market is expected to generate 2.51 times more return on investment than Lord Abbett. However, Caldwell Orkin is 2.51 times more volatile than Lord Abbett Diversified. It trades about 0.14 of its potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.11 per unit of risk. If you would invest  2,854  in Caldwell Orkin Market on September 4, 2024 and sell it today you would earn a total of  2,459  from holding Caldwell Orkin Market or generate 86.16% return on investment over 90 days.

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

Caldwell Orkin Market  vs.  Lord Abbett Diversified

Caldwell Orkin Market

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Orkin Market are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Caldwell Orkin showed solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Diversified

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Diversified are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental 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 Caldwell Orkin and Lord Abbett

The main advantage of trading using opposite Caldwell Orkin and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caldwell Orkin 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 Caldwell Orkin Market and Lord Abbett Diversified 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.