Correlation Between Guidemark(r) Small/mid and L Abbett
Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Small/mid 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 Guidemark(r) Small/mid and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Smallmid Cap and L Abbett Growth, you can compare the effects of market volatilities on Guidemark(r) Small/mid 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 Guidemark(r) Small/mid with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Small/mid and L Abbett.
Diversification Opportunities for Guidemark(r) Small/mid and L Abbett
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guidemark(r) and LGLSX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid 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 Guidemark(r) Small/mid 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 Guidemark Smallmid 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 Guidemark(r) Small/mid i.e., Guidemark(r) Small/mid and L Abbett go up and down completely randomly.
Pair Corralation between Guidemark(r) Small/mid and L Abbett
Assuming the 90 days horizon Guidemark(r) Small/mid is expected to generate 1.75 times less return on investment than L Abbett. But when comparing it to its historical volatility, Guidemark Smallmid Cap is 1.21 times less risky than L Abbett. It trades about 0.07 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,853 in L Abbett Growth on August 31, 2024 and sell it today you would earn a total of 1,891 from holding L Abbett Growth or generate 66.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidemark Smallmid Cap vs. L Abbett Growth
Performance |
| Timeline |
| Guidemark Smallmid Cap |
| L Abbett Growth |
Guidemark(r) Small/mid and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidemark(r) Small/mid and L Abbett
The main advantage of trading using opposite Guidemark(r) Small/mid and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Small/mid 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.| Guidemark(r) Small/mid vs. L Abbett Growth | Guidemark(r) Small/mid vs. Kinetics Small Cap | Guidemark(r) Small/mid vs. Eip Growth And | Guidemark(r) Small/mid vs. Artisan Small Cap |
| L Abbett vs. Europacific Growth Fund | L Abbett vs. Washington Mutual Investors | L Abbett vs. Capital World Growth | L Abbett vs. HUMANA INC |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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