Correlation Between Lord Abbett and First Trust

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

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

Diversification Opportunities for Lord Abbett and First Trust

0.85

Correlation Coefficient

Lord Abbett  First Trust

Very poor diversification

The 3 months correlation between Lord and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Intermediate and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed 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 Intermediate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Managed has no effect on the direction of Lord Abbett i.e., Lord Abbett and First Trust go up and down completely randomly.

Pair Corralation between Lord Abbett and First Trust

Assuming the 90 days horizon Lord Abbett Intermediate is expected to generate 1.01 times more return on investment than First Trust. However, Lord Abbett is 1.01 times more volatile than First Trust Managed. It trades about 0.16 of its potential returns per unit of risk. First Trust Managed is currently generating about 0.07 per unit of risk. If you would invest  994.00  in Lord Abbett Intermediate on May 25, 2025 and sell it today you would earn a total of  12.00  from holding Lord Abbett Intermediate or generate 1.21% return on investment over 90 days.

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

Lord Abbett Intermediate  vs.  First Trust Managed

Lord Abbett Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Intermediate are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust Managed

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Managed are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, First Trust 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 First Trust

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

The idea behind Lord Abbett Intermediate and First Trust Managed 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.