Correlation Between Nationwide Bny and Lord Abbett

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

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

Diversification Opportunities for Nationwide Bny and Lord Abbett

0.88

Correlation Coefficient

Nationwide Bny  Lord Abbett

Very poor diversification

The 3 months correlation between Nationwide and Lord is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bny Mellon and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and Nationwide Bny 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 Nationwide Bny Mellon 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 Convertible has no effect on the direction of Nationwide Bny i.e., Nationwide Bny and Lord Abbett go up and down completely randomly.

Pair Corralation between Nationwide Bny and Lord Abbett

Assuming the 90 days horizon Nationwide Bny is expected to generate 1.6 times less return on investment than Lord Abbett. In addition to that, Nationwide Bny is 1.37 times more volatile than Lord Abbett Convertible. It trades about 0.13 of its total potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.29 per unit of volatility. If you would invest  1,342  in Lord Abbett Convertible on September 11, 2024 and sell it today you would earn a total of  131.00  from holding Lord Abbett Convertible or generate 9.76% return on investment over 90 days.

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

Nationwide Bny Mellon  vs.  Lord Abbett Convertible

Nationwide Bny Mellon

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Bny Mellon are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Bny is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Convertible

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nationwide Bny and Lord Abbett

The main advantage of trading using opposite Nationwide Bny and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Bny 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 Nationwide Bny Mellon and Lord Abbett Convertible 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.