Correlation Between Fidelity Small and L Abbett
Can any of the company-specific risk be diversified away by investing in both Fidelity Small 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 Fidelity Small and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and L Abbett Growth, you can compare the effects of market volatilities on Fidelity Small 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 Fidelity Small with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and L Abbett.
Diversification Opportunities for Fidelity Small and L Abbett
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and LGLSX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap 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 Fidelity 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 Fidelity Small Cap 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 Fidelity Small i.e., Fidelity Small and L Abbett go up and down completely randomly.
Pair Corralation between Fidelity Small and L Abbett
Assuming the 90 days horizon Fidelity Small Cap is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Small Cap is 1.19 times less risky than L Abbett. The mutual fund trades about -0.27 of its potential returns per unit of risk. The L Abbett Growth is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,788 in L Abbett Growth on September 22, 2024 and sell it today you would lose (44.00) from holding L Abbett Growth or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. L Abbett Growth
Performance |
| Timeline |
| Fidelity Small Cap |
| L Abbett Growth |
Fidelity Small and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and L Abbett
The main advantage of trading using opposite Fidelity Small and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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.| Fidelity Small vs. Fidelity Large Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Mid Cap |
| L Abbett vs. Foundry Partners Fundamental | L Abbett vs. Fidelity Small Cap | L Abbett vs. John Hancock Ii | L Abbett vs. Vanguard Small Cap Value |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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