Correlation Between Lord Abbett and Transamerica Large

Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Transamerica Large 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 Transamerica Large 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 Transamerica Large Growth, you can compare the effects of market volatilities on Lord Abbett and Transamerica Large 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 Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Transamerica Large.

Diversification Opportunities for Lord Abbett and Transamerica Large

0.15

Correlation Coefficient

Lord Abbett  Transamerica Large

Average diversification

The 3 months correlation between Lord and Transamerica is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Transamerica Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Growth 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Transamerica Large go up and down completely randomly.

Pair Corralation between Lord Abbett and Transamerica Large

Assuming the 90 days horizon Lord Abbett Health is expected to under-perform the Transamerica Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Health is 1.34 times less risky than Transamerica Large. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Transamerica Large Growth is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,392  in Transamerica Large Growth on September 21, 2024 and sell it today you would earn a total of  254.00  from holding Transamerica Large Growth or generate 18.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Lord Abbett Health  vs.  Transamerica Large 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.

Transamerica Large Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Transamerica Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lord Abbett and Transamerica Large

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

The idea behind Lord Abbett Health and Transamerica Large 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.