Correlation Between Inverse Government and Lord Abbett

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

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

Diversification Opportunities for Inverse Government and Lord Abbett

0.59

Correlation Coefficient

Inverse Government  Lord Abbett

Very weak diversification

The 3 months correlation between Inverse and Lord is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Lord Abbett Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Floating and Inverse Government 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 Inverse Government Long 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 Floating has no effect on the direction of Inverse Government i.e., Inverse Government and Lord Abbett go up and down completely randomly.

Pair Corralation between Inverse Government and Lord Abbett

Assuming the 90 days horizon Inverse Government Long is expected to under-perform the Lord Abbett. In addition to that, Inverse Government is 37.43 times more volatile than Lord Abbett Floating. It trades about -0.15 of its total potential returns per unit of risk. Lord Abbett Floating is currently generating about -0.12 per unit of volatility. If you would invest  819.00  in Lord Abbett Floating on September 22, 2024 and sell it today you would lose (1.00) from holding Lord Abbett Floating or give up 0.12% of portfolio value over 90 days.

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

Inverse Government Long  vs.  Lord Abbett Floating

Inverse Government Long

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Government Long are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Inverse Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Floating

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Floating are ranked lower than 14 (%) 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.

Pair Trading with Inverse Government and Lord Abbett

The main advantage of trading using opposite Inverse Government and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government 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 Inverse Government Long and Lord Abbett Floating 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.