Correlation Between Chase Growth and L Abbett
Can any of the company-specific risk be diversified away by investing in both Chase Growth 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 Chase Growth and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chase Growth Fund and L Abbett Growth, you can compare the effects of market volatilities on Chase Growth 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 Chase Growth with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chase Growth and L Abbett.
Diversification Opportunities for Chase Growth and L Abbett
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Chase and LGLSX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Chase Growth Fund 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 Chase Growth 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 Chase Growth Fund 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 Chase Growth i.e., Chase Growth and L Abbett go up and down completely randomly.
Pair Corralation between Chase Growth and L Abbett
Assuming the 90 days horizon Chase Growth is expected to generate 1.41 times less return on investment than L Abbett. But when comparing it to its historical volatility, Chase Growth Fund is 1.36 times less risky than L Abbett. It trades about 0.1 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,572 in L Abbett Growth on August 27, 2024 and sell it today you would earn a total of 2,211 from holding L Abbett Growth or generate 85.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chase Growth Fund vs. L Abbett Growth
Performance |
| Timeline |
| Chase Growth |
| L Abbett Growth |
Chase Growth and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chase Growth and L Abbett
The main advantage of trading using opposite Chase Growth and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chase Growth 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.| Chase Growth vs. Vanguard Explorer Fund | Chase Growth vs. Vanguard Treasury Money | Chase Growth vs. Sterling Capital Stratton | Chase Growth vs. Growth Fund Of |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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