Correlation Between Moderate Strategy and Lord Abbett

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

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

Diversification Opportunities for Moderate Strategy and Lord Abbett

0.98

Correlation Coefficient

Moderate Strategy  Lord Abbett

Almost no diversification

The 3 months correlation between Moderate and Lord is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Strategy Fund and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified and Moderate Strategy 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 Moderate Strategy 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 Diversified has no effect on the direction of Moderate Strategy i.e., Moderate Strategy and Lord Abbett go up and down completely randomly.

Pair Corralation between Moderate Strategy and Lord Abbett

Assuming the 90 days horizon Moderate Strategy Fund is expected to generate 1.25 times more return on investment than Lord Abbett. However, Moderate Strategy is 1.25 times more volatile than Lord Abbett Diversified. It trades about 0.33 of its potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.37 per unit of risk. If you would invest  863.00  in Moderate Strategy Fund on April 21, 2025 and sell it today you would earn a total of  72.00  from holding Moderate Strategy Fund or generate 8.34% return on investment over 90 days.

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

Moderate Strategy Fund  vs.  Lord Abbett Diversified

Moderate Strategy

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Moderate Strategy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Lord Abbett Diversified

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Diversified are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Moderate Strategy and Lord Abbett

The main advantage of trading using opposite Moderate Strategy and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Strategy 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 Moderate Strategy Fund and Lord Abbett Diversified 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 Transaction History module to view history of all your transactions and understand their impact on performance.