Correlation Between Lord Abbett and Asset Allocation

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

Diversification Opportunities for Lord Abbett and Asset Allocation

0.38

Correlation Coefficient

Lord Abbett  Asset Allocation

Weak diversification

The 3 months correlation between Lord and Asset is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Asset Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Allocation 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 Asset Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Allocation has no effect on the direction of Lord Abbett i.e., Lord Abbett and Asset Allocation go up and down completely randomly.

Pair Corralation between Lord Abbett and Asset Allocation

Assuming the 90 days horizon Lord Abbett Health is expected to under-perform the Asset Allocation. In addition to that, Lord Abbett is 2.15 times more volatile than Asset Allocation Fund. It trades about -0.01 of its total potential returns per unit of risk. Asset Allocation Fund is currently generating about 0.15 per unit of volatility. If you would invest  1,203  in Asset Allocation Fund on September 12, 2024 and sell it today you would earn a total of  54.00  from holding Asset Allocation Fund or generate 4.49% return on investment over 90 days.

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

Lord Abbett Health  vs.  Asset Allocation Fund

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.

Asset Allocation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asset Allocation Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Asset Allocation 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 Asset Allocation

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

The idea behind Lord Abbett Health and Asset Allocation Fund 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.