Correlation Between American Century and L Abbett
Can any of the company-specific risk be diversified away by investing in both American Century and L 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 American Century and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Investment and L Abbett Growth, you can compare the effects of market volatilities on American Century and L 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 American Century with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and L Abbett.
Diversification Opportunities for American Century and L Abbett
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and LGLSX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Century Investment and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth and American Century 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 American Century Investment are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of American Century i.e., American Century and L Abbett go up and down completely randomly.
Pair Corralation between American Century and L Abbett
If you would invest 4,357 in L Abbett Growth on September 13, 2024 and sell it today you would earn a total of 443.00 from holding L Abbett Growth or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Century Investment vs. L Abbett Growth
Performance |
| Timeline |
| American Century Inv |
| L Abbett Growth |
American Century and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and L Abbett
The main advantage of trading using opposite American Century and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, L 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 L Abbett will offset losses from the drop in L Abbett's long position.| American Century vs. L Abbett Growth | American Century vs. Rational Defensive Growth | American Century vs. Qs Growth Fund | American Century vs. Smallcap Growth Fund |
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Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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