Correlation Between Lord Abbett and American Mutual
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and American Mutual 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 Lord Abbett and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Affiliated and American Mutual Fund, you can compare the effects of market volatilities on Lord Abbett and American Mutual 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 Lord Abbett with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and American Mutual.
Diversification Opportunities for Lord Abbett and American Mutual
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lord and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Affiliated and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Lord Abbett 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 Lord Abbett Affiliated are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Lord Abbett i.e., Lord Abbett and American Mutual go up and down completely randomly.
Pair Corralation between Lord Abbett and American Mutual
Assuming the 90 days horizon Lord Abbett Affiliated is expected to generate 1.16 times more return on investment than American Mutual. However, Lord Abbett is 1.16 times more volatile than American Mutual Fund. It trades about 0.04 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.03 per unit of risk. If you would invest 1,505 in Lord Abbett Affiliated on January 19, 2024 and sell it today you would earn a total of 264.00 from holding Lord Abbett Affiliated or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Affiliated vs. American Mutual Fund
Performance |
| Timeline |
| Lord Abbett Affiliated |
| American Mutual |
Lord Abbett and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and American Mutual
The main advantage of trading using opposite Lord Abbett and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Lord Abbett vs. Vanguard Value Index | Lord Abbett vs. American Mutual Fund | Lord Abbett vs. American Mutual Fund | Lord Abbett vs. Dodge Stock Fund |
| American Mutual vs. Vanguard Value Index | American Mutual vs. American Mutual Fund | American Mutual vs. American Mutual Fund | American Mutual vs. Dodge Stock Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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