Correlation Between Century Small and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Century 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 Century 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 Century Small Cap and Lord Abbett Trust, you can compare the effects of market volatilities on Century 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 Century Small with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Small and Lord Abbett.
Diversification Opportunities for Century Small and Lord Abbett
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Lord is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Century Small Cap and Lord Abbett Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Trust and Century 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 Century Small Cap 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 Trust has no effect on the direction of Century Small i.e., Century Small and Lord Abbett go up and down completely randomly.
Pair Corralation between Century Small and Lord Abbett
Assuming the 90 days horizon Century Small is expected to generate 2.45 times less return on investment than Lord Abbett. In addition to that, Century Small is 1.75 times more volatile than Lord Abbett Trust. It trades about 0.02 of its total potential returns per unit of risk. Lord Abbett Trust is currently generating about 0.1 per unit of volatility. If you would invest 1,574 in Lord Abbett Trust on September 14, 2024 and sell it today you would earn a total of 18.00 from holding Lord Abbett Trust or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Small Cap vs. Lord Abbett Trust
Performance |
| Timeline |
| Century Small Cap |
| Lord Abbett Trust |
Century Small and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Small and Lord Abbett
The main advantage of trading using opposite Century Small and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century 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.| Century Small vs. Third Avenue Real | Century Small vs. Aegis Value Fund | Century Small vs. Litman Gregory Masters | Century Small vs. Marsico Growth Fund |
| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund | Lord Abbett vs. Floating Rate Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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