Correlation Between American Mutual and Lord Abbett

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

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

Diversification Opportunities for American Mutual and Lord Abbett

0.97

Correlation Coefficient

American Mutual  Lord Abbett

Almost no diversification

The 3 months correlation between American and Lord is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Lord Abbett Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Convertible and American Mutual 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 American Mutual 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 Convertible has no effect on the direction of American Mutual i.e., American Mutual and Lord Abbett go up and down completely randomly.

Pair Corralation between American Mutual and Lord Abbett

Assuming the 90 days horizon American Mutual is expected to generate 1.11 times less return on investment than Lord Abbett. In addition to that, American Mutual is 1.27 times more volatile than Lord Abbett Convertible. It trades about 0.2 of its total potential returns per unit of risk. Lord Abbett Convertible is currently generating about 0.29 per unit of volatility. If you would invest  1,441  in Lord Abbett Convertible on May 5, 2025 and sell it today you would earn a total of  128.00  from holding Lord Abbett Convertible or generate 8.88% return on investment over 90 days.

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

American Mutual Fund  vs.  Lord Abbett Convertible

American Mutual

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Mutual Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, American Mutual may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Lord Abbett Convertible

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with American Mutual and Lord Abbett

The main advantage of trading using opposite American Mutual and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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 American Mutual Fund and Lord Abbett Convertible 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.