Correlation Between Federated Global and L Abbett
Can any of the company-specific risk be diversified away by investing in both Federated Global 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 Federated Global and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and L Abbett Fundamental, you can compare the effects of market volatilities on Federated Global 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 Federated Global with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and L Abbett.
Diversification Opportunities for Federated Global and L Abbett
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and LAVVX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental and Federated Global 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 Federated Global Allocation 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 Fundamental has no effect on the direction of Federated Global i.e., Federated Global and L Abbett go up and down completely randomly.
Pair Corralation between Federated Global and L Abbett
Assuming the 90 days horizon Federated Global is expected to generate 2.03 times less return on investment than L Abbett. But when comparing it to its historical volatility, Federated Global Allocation is 1.22 times less risky than L Abbett. It trades about 0.28 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 1,536 in L Abbett Fundamental on November 1, 2024 and sell it today you would earn a total of 95.00 from holding L Abbett Fundamental or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. L Abbett Fundamental
Performance |
| Timeline |
| Federated Global All |
| L Abbett Fundamental |
Federated Global and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and L Abbett
The main advantage of trading using opposite Federated Global and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global 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.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
| L Abbett vs. Franklin Government Money | L Abbett vs. Money Market Obligations | L Abbett vs. Ab Government Exchange | L Abbett vs. Dws Government Money |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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