Correlation Between Champlain Small and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Champlain Small 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 Champlain Small and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Lord Abbett Small, you can compare the effects of market volatilities on Champlain Small 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 Champlain Small with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Lord Abbett.
Diversification Opportunities for Champlain Small and Lord Abbett
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champlain and Lord is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Champlain Small 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 Champlain Small 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 Small has no effect on the direction of Champlain Small i.e., Champlain Small and Lord Abbett go up and down completely randomly.
Pair Corralation between Champlain Small and Lord Abbett
Assuming the 90 days horizon Champlain Small is expected to generate 1.27 times more return on investment than Lord Abbett. However, Champlain Small is 1.27 times more volatile than Lord Abbett Small. It trades about 0.02 of its potential returns per unit of risk. Lord Abbett Small is currently generating about -0.04 per unit of risk. If you would invest 2,550 in Champlain Small on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Champlain Small or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Lord Abbett Small
Performance |
| Timeline |
| Champlain Small |
| Lord Abbett Small |
Champlain Small and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Lord Abbett
The main advantage of trading using opposite Champlain Small and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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.| Champlain Small vs. Needham Aggressive Growth | Champlain Small vs. Ultramid Cap Profund Ultramid Cap | Champlain Small vs. HUMANA INC | Champlain Small vs. Barloworld Ltd ADR |
| Lord Abbett vs. Siit Ultra Short | Lord Abbett vs. Quantitative Longshort Equity | Lord Abbett vs. Virtus Multi Sector Short | Lord Abbett vs. Aqr Long Short Equity |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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