Correlation Between Nasdaq 100 and Lord Abbett

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Index Fund and Lord Abbett Short, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Lord Abbett.

Diversification Opportunities for Nasdaq 100 and Lord Abbett

0.23

Correlation Coefficient

Nasdaq 100  Lord Abbett

Modest diversification

The 3 months correlation between Nasdaq and Lord is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Nasdaq 100 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 Nasdaq 100 Index Fund 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 Short has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Lord Abbett go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Lord Abbett

Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 12.67 times more return on investment than Lord Abbett. However, Nasdaq 100 is 12.67 times more volatile than Lord Abbett Short. It trades about 0.02 of its potential returns per unit of risk. Lord Abbett Short is currently generating about -0.13 per unit of risk. If you would invest  5,262  in Nasdaq 100 Index Fund on September 29, 2024 and sell it today you would earn a total of  22.00  from holding Nasdaq 100 Index Fund or generate 0.42% return on investment over 90 days.

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

Nasdaq 100 Index Fund  vs.  Lord Abbett Short

Nasdaq 100 Index

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nasdaq 100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Nasdaq 100 and Lord Abbett

The main advantage of trading using opposite Nasdaq 100 and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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 Nasdaq 100 Index Fund and Lord Abbett Short 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.