Correlation Between Lord Abbett and Sentinel Low

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

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

Diversification Opportunities for Lord Abbett and Sentinel Low

0.73

Correlation Coefficient

Lord Abbett  Sentinel Low

Poor diversification

The 3 months correlation between Lord and Sentinel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Sentinel Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Low Duration 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 Diversified are associated (or correlated) with Sentinel Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Low Duration has no effect on the direction of Lord Abbett i.e., Lord Abbett and Sentinel Low go up and down completely randomly.

Pair Corralation between Lord Abbett and Sentinel Low

Assuming the 90 days horizon Lord Abbett Diversified is expected to generate 3.42 times more return on investment than Sentinel Low. However, Lord Abbett is 3.42 times more volatile than Sentinel Low Duration. It trades about 0.18 of its potential returns per unit of risk. Sentinel Low Duration is currently generating about 0.2 per unit of risk. If you would invest  1,606  in Lord Abbett Diversified on August 12, 2024 and sell it today you would earn a total of  39.00  from holding Lord Abbett Diversified or generate 2.43% return on investment over 90 days.

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

Lord Abbett Diversified  vs.  Sentinel Low Duration

Lord Abbett Diversified

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Diversified 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.

Sentinel Low Duration

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Low Duration are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sentinel Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lord Abbett and Sentinel Low

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

The idea behind Lord Abbett Diversified and Sentinel Low Duration 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.