Correlation Between Vanguard Information and Lord Abbett

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

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

Diversification Opportunities for Vanguard Information and Lord Abbett

0.85

Correlation Coefficient

Vanguard Information  Lord Abbett

Very poor diversification

The 3 months correlation between Vanguard and Lord is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Lord Abbett Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Investment and Vanguard Information 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 Vanguard Information Technology 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 Investment has no effect on the direction of Vanguard Information i.e., Vanguard Information and Lord Abbett go up and down completely randomly.

Pair Corralation between Vanguard Information and Lord Abbett

Assuming the 90 days horizon Vanguard Information Technology is expected to generate 11.88 times more return on investment than Lord Abbett. However, Vanguard Information is 11.88 times more volatile than Lord Abbett Investment. It trades about 0.2 of its potential returns per unit of risk. Lord Abbett Investment is currently generating about 0.22 per unit of risk. If you would invest  28,775  in Vanguard Information Technology on September 18, 2024 and sell it today you would earn a total of  4,408  from holding Vanguard Information Technology or generate 15.32% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  Lord Abbett Investment

Vanguard Information

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information showed solid returns over the last few months and may actually be approaching a breakup point.

Lord Abbett Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Investment are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and 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 Vanguard Information and Lord Abbett

The main advantage of trading using opposite Vanguard Information and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Information 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 Vanguard Information Technology and Lord Abbett Investment 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.