Correlation Between Lord Abbett and Teton Vertible

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

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

Diversification Opportunities for Lord Abbett and Teton Vertible

0.82

Correlation Coefficient

Lord Abbett  Teton Vertible

Very poor diversification

The 3 months correlation between Lord and Teton is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Convertible and Teton Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Vertible Securities 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 Convertible are associated (or correlated) with Teton Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Vertible Securities has no effect on the direction of Lord Abbett i.e., Lord Abbett and Teton Vertible go up and down completely randomly.

Pair Corralation between Lord Abbett and Teton Vertible

Assuming the 90 days horizon Lord Abbett Convertible is expected to generate 0.8 times more return on investment than Teton Vertible. However, Lord Abbett Convertible is 1.25 times less risky than Teton Vertible. It trades about 0.1 of its potential returns per unit of risk. Teton Vertible Securities is currently generating about 0.05 per unit of risk. If you would invest  1,293  in Lord Abbett Convertible on February 20, 2024 and sell it today you would earn a total of  43.00  from holding Lord Abbett Convertible or generate 3.33% return on investment over 90 days.

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

Lord Abbett Convertible  vs.  Teton Vertible Securities

Lord Abbett Convertible

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Convertible are ranked lower than 7 (%) 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.

Teton Vertible Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teton Vertible Securities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Teton Vertible 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 Teton Vertible

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

The idea behind Lord Abbett Convertible and Teton Vertible Securities 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.