Correlation Between Pax High and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Pax High 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 Pax High and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pax High Yield and Lord Abbett Bond, you can compare the effects of market volatilities on Pax High 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 Pax High with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax High and Lord Abbett.
Diversification Opportunities for Pax High and Lord Abbett
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pax and Lord is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pax High Yield and Lord Abbett Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Bond and Pax High 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 Pax High Yield 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 Bond has no effect on the direction of Pax High i.e., Pax High and Lord Abbett go up and down completely randomly.
Pair Corralation between Pax High and Lord Abbett
Assuming the 90 days horizon Pax High Yield is expected to generate 0.76 times more return on investment than Lord Abbett. However, Pax High Yield is 1.31 times less risky than Lord Abbett. It trades about 0.07 of its potential returns per unit of risk. Lord Abbett Bond is currently generating about 0.04 per unit of risk. If you would invest 608.00 in Pax High Yield on September 15, 2024 and sell it today you would earn a total of 4.00 from holding Pax High Yield or generate 0.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pax High Yield vs. Lord Abbett Bond
Performance |
Timeline |
Pax High Yield |
Lord Abbett Bond |
Pax High and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pax High and Lord Abbett
The main advantage of trading using opposite Pax High and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax High 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.Pax High vs. Pax E Bond | Pax High vs. Pax Global Environmental | Pax High vs. Pax Esg Beta | Pax High vs. Pax Global Opportunities |
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Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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