Correlation Between Small Cap and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Lord Abbett Growth, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Lord Abbett.
Diversification Opportunities for Small Cap and Lord Abbett
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Lord is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth and Small Cap 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 Small Cap Equity 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 Growth has no effect on the direction of Small Cap i.e., Small Cap and Lord Abbett go up and down completely randomly.
Pair Corralation between Small Cap and Lord Abbett
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.17 times more return on investment than Lord Abbett. However, Small Cap is 1.17 times more volatile than Lord Abbett Growth. It trades about 0.24 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.27 per unit of risk. If you would invest 1,868 in Small Cap Equity on August 31, 2024 and sell it today you would earn a total of 163.00 from holding Small Cap Equity or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Lord Abbett Growth
Performance |
| Timeline |
| Small Cap Equity |
| Lord Abbett Growth |
Small Cap and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Lord Abbett
The main advantage of trading using opposite Small Cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Vanguard Small Cap Index | Small Cap vs. T Rowe Price | Small Cap vs. HUMANA INC | Small Cap vs. SCOR PK |
| Lord Abbett vs. Icon Equity Income | Lord Abbett vs. Small Cap Equity | Lord Abbett vs. Sarofim Equity | Lord Abbett vs. The Gabelli 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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