Correlation Between Redwood Managed and Lord Abbett

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

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

Diversification Opportunities for Redwood Managed and Lord Abbett

0.66

Correlation Coefficient

Redwood Managed  Lord Abbett

Poor diversification

The 3 months correlation between Redwood and Lord is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Managed Municipal and Lord Abbett Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Intermediate and Redwood Managed 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 Redwood Managed Municipal 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 Intermediate has no effect on the direction of Redwood Managed i.e., Redwood Managed and Lord Abbett go up and down completely randomly.

Pair Corralation between Redwood Managed and Lord Abbett

Assuming the 90 days horizon Redwood Managed Municipal is not expected to generate positive returns. However, Redwood Managed Municipal is 3.18 times less risky than Lord Abbett. It waists most of its returns potential to compensate for thr risk taken. Lord Abbett is generating about -0.07 per unit of risk. If you would invest  1,307  in Redwood Managed Municipal on May 5, 2025 and sell it today you would earn a total of  0.00  from holding Redwood Managed Municipal or generate 0.0% return on investment over 90 days.

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

Redwood Managed Municipal  vs.  Lord Abbett Intermediate

Redwood Managed Municipal

Risk-Adjusted Performance

Good

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

Lord Abbett Intermediate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Intermediate are ranked lower than 5 (%) 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.

Pair Trading with Redwood Managed and Lord Abbett

The main advantage of trading using opposite Redwood Managed and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Managed 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 Redwood Managed Municipal and Lord Abbett Intermediate 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.