Correlation Between Lord Abbett and Hartford Healthcare

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

By analyzing existing cross correlation between Lord Abbett Health and Hartford Healthcare Hls, you can compare the effects of market volatilities on Lord Abbett and Hartford Healthcare 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 Hartford Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Hartford Healthcare.

Diversification Opportunities for Lord Abbett and Hartford Healthcare

0.82

Correlation Coefficient

Lord Abbett  Hartford Healthcare

Very poor diversification

The 3 months correlation between Lord and Hartford is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Health and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls 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 Health are associated (or correlated) with Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of Lord Abbett i.e., Lord Abbett and Hartford Healthcare go up and down completely randomly.

Pair Corralation between Lord Abbett and Hartford Healthcare

Assuming the 90 days horizon Lord Abbett is expected to generate 1.16 times less return on investment than Hartford Healthcare. In addition to that, Lord Abbett is 1.25 times more volatile than Hartford Healthcare Hls. It trades about 0.05 of its total potential returns per unit of risk. Hartford Healthcare Hls is currently generating about 0.07 per unit of volatility. If you would invest  1,439  in Hartford Healthcare Hls on June 23, 2024 and sell it today you would earn a total of  443.00  from holding Hartford Healthcare Hls or generate 30.79% return on investment over 90 days.

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

Lord Abbett Health  vs.  Hartford Healthcare Hls

Lord Abbett Health

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Health are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Hartford Healthcare Hls

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Healthcare Hls are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Hartford Healthcare may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Lord Abbett and Hartford Healthcare

The main advantage of trading using opposite Lord Abbett and Hartford Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Hartford Healthcare 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 Hartford Healthcare will offset losses from the drop in Hartford Healthcare's long position.

The idea behind Lord Abbett Health and Hartford Healthcare Hls 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 Global Correlations module to find global opportunities by holding instruments from different markets.