Correlation Between US Bancorp and Lord Abbett

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

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

Diversification Opportunities for US Bancorp and Lord Abbett

0.85

Correlation Coefficient

US Bancorp  Lord Abbett

Very poor diversification

The 3 months correlation between USB and Lord is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp and Lord Abbett Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Floating and US Bancorp 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 US Bancorp 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 Floating has no effect on the direction of US Bancorp i.e., US Bancorp and Lord Abbett go up and down completely randomly.

Pair Corralation between US Bancorp and Lord Abbett

Considering the 90-day investment horizon US Bancorp is expected to under-perform the Lord Abbett. In addition to that, US Bancorp is 10.59 times more volatile than Lord Abbett Floating. It trades about -0.02 of its total potential returns per unit of risk. Lord Abbett Floating is currently generating about 0.05 per unit of volatility. If you would invest  800.00  in Lord Abbett Floating on February 21, 2025 and sell it today you would earn a total of  6.00  from holding Lord Abbett Floating or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

US Bancorp  vs.  Lord Abbett Floating

US Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, US Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Floating

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Floating are ranked lower than 4 (%) 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 US Bancorp and Lord Abbett

The main advantage of trading using opposite US Bancorp and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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 US Bancorp and Lord Abbett Floating 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.