Correlation Between Vy Baron and Lord Abbett

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

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

Diversification Opportunities for Vy Baron and Lord Abbett

0.42

Correlation Coefficient

Vy Baron  Lord Abbett

Very weak diversification

The 3 months correlation between IBSSX and Lord is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vy Baron Growth and Lord Abbett Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Inv and Vy Baron 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 Vy Baron 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 Inv has no effect on the direction of Vy Baron i.e., Vy Baron and Lord Abbett go up and down completely randomly.

Pair Corralation between Vy Baron and Lord Abbett

Assuming the 90 days horizon Vy Baron Growth is expected to under-perform the Lord Abbett. In addition to that, Vy Baron is 8.37 times more volatile than Lord Abbett Inv. It trades about -0.05 of its total potential returns per unit of risk. Lord Abbett Inv is currently generating about 0.23 per unit of volatility. If you would invest  805.00  in Lord Abbett Inv on September 21, 2024 and sell it today you would earn a total of  13.00  from holding Lord Abbett Inv or generate 1.61% return on investment over 90 days.

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

Vy Baron Growth  vs.  Lord Abbett Inv

Vy Baron Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lord Abbett Inv

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Inv are ranked lower than 18 (%) 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 Vy Baron and Lord Abbett

The main advantage of trading using opposite Vy Baron and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vy Baron 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 Vy Baron Growth and Lord Abbett Inv 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 Transaction History module to view history of all your transactions and understand their impact on performance.