Correlation Between Lord Abbett and Multi Strategy

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

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

Diversification Opportunities for Lord Abbett and Multi Strategy

0.4

Correlation Coefficient

Lord Abbett  Multi Strategy

Very weak diversification

The 3 months correlation between Lord and Multi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and The Multi Strategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Strategy and Lord Abbett 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 Lord Abbett Health are associated (or correlated) with Multi Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Strategy has no effect on the direction of Lord Abbett i.e., Lord Abbett and Multi Strategy go up and down completely randomly.

Pair Corralation between Lord Abbett and Multi Strategy

Assuming the 90 days horizon Lord Abbett Health is expected to under-perform the Multi Strategy. In addition to that, Lord Abbett is 1.93 times more volatile than The Multi Strategy Growth. It trades about -0.04 of its total potential returns per unit of risk. The Multi Strategy Growth is currently generating about 0.01 per unit of volatility. If you would invest  1,151  in The Multi Strategy Growth on September 27, 2024 and sell it today you would earn a total of  3.00  from holding The Multi Strategy Growth or generate 0.26% return on investment over 90 days.

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

Lord Abbett Health  vs.  The Multi Strategy Growth

Lord Abbett Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong 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.

Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lord Abbett and Multi Strategy

The main advantage of trading using opposite Lord Abbett and Multi Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Multi Strategy 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 Multi Strategy will offset losses from the drop in Multi Strategy's long position.

The idea behind Lord Abbett Health and The Multi Strategy Growth 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.