Correlation Between Energy Basic and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Energy Basic 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 Energy Basic and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Basic Materials and Lord Abbett Small, you can compare the effects of market volatilities on Energy Basic 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 Energy Basic with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Basic and Lord Abbett.
Diversification Opportunities for Energy Basic and Lord Abbett
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Energy and Lord is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Energy Basic Materials and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Energy Basic 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 Energy Basic Materials 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 Small has no effect on the direction of Energy Basic i.e., Energy Basic and Lord Abbett go up and down completely randomly.
Pair Corralation between Energy Basic and Lord Abbett
Assuming the 90 days horizon Energy Basic Materials is expected to under-perform the Lord Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Energy Basic Materials is 1.3 times less risky than Lord Abbett. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Lord Abbett Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,222 in Lord Abbett Small on September 14, 2024 and sell it today you would earn a total of 229.00 from holding Lord Abbett Small or generate 10.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Energy Basic Materials vs. Lord Abbett Small
Performance |
Timeline |
Energy Basic Materials |
Lord Abbett Small |
Energy Basic and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Energy Basic and Lord Abbett
The main advantage of trading using opposite Energy Basic and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Basic 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.Energy Basic vs. Salient Alternative Beta | Energy Basic vs. Aggressive Balanced Allocation | Energy Basic vs. Salient Alternative Beta | Energy Basic vs. Moderately Aggressive Balanced |
Lord Abbett vs. Touchstone Large Cap | Lord Abbett vs. Upright Assets Allocation | Lord Abbett vs. Fm Investments Large | Lord Abbett vs. Aqr Large Cap |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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