Correlation Between Lord Abbett and HP

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

By analyzing existing cross correlation between Lord Abbett Ultra and HP Inc, you can compare the effects of market volatilities on Lord Abbett and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and HP.

Diversification Opportunities for Lord Abbett and HP

0.21

Correlation Coefficient

Lord Abbett  HP

Modest diversification

The 3 months correlation between Lord and HP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Ultra and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 Ultra are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Lord Abbett i.e., Lord Abbett and HP go up and down completely randomly.

Pair Corralation between Lord Abbett and HP

Assuming the 90 days horizon Lord Abbett is expected to generate 8.89 times less return on investment than HP. But when comparing it to its historical volatility, Lord Abbett Ultra is 25.84 times less risky than HP. It trades about 0.15 of its potential returns per unit of risk. HP Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,304  in HP Inc on September 13, 2024 and sell it today you would earn a total of  194.00  from holding HP Inc or generate 5.87% 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 Ultra  vs.  HP Inc

Lord Abbett Ultra

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Ultra are ranked lower than 12 (%) 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.

HP Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, HP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lord Abbett and HP

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

The idea behind Lord Abbett Ultra and HP Inc 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.