Correlation Between Virtus Multi-sector and Lord Abbett

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

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

Diversification Opportunities for Virtus Multi-sector and Lord Abbett

0.75

Correlation Coefficient

Virtus Multi-sector  Lord Abbett

Poor diversification

The 3 months correlation between Virtus and Lord is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Multi Sector Short and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Virtus Multi-sector 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 Virtus Multi Sector Short 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 Short has no effect on the direction of Virtus Multi-sector i.e., Virtus Multi-sector and Lord Abbett go up and down completely randomly.

Pair Corralation between Virtus Multi-sector and Lord Abbett

Assuming the 90 days horizon Virtus Multi Sector Short is expected to under-perform the Lord Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Virtus Multi Sector Short is 1.21 times less risky than Lord Abbett. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Lord Abbett Short is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Lord Abbett Short on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Lord Abbett Short or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Virtus Multi Sector Short  vs.  Lord Abbett Short

Virtus Multi Sector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Multi Sector Short are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Multi-sector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Short

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Virtus Multi-sector and Lord Abbett

The main advantage of trading using opposite Virtus Multi-sector and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Multi-sector 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 Virtus Multi Sector Short and Lord Abbett Short 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.