Correlation Between Icon Financial and L Abbett
Can any of the company-specific risk be diversified away by investing in both Icon Financial 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 Icon Financial and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Financial Fund and L Abbett Fundamental, you can compare the effects of market volatilities on Icon Financial 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 Icon Financial with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Financial and L Abbett.
Diversification Opportunities for Icon Financial and L Abbett
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icon and LAVVX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Icon Financial Fund 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 Icon Financial 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 Icon Financial Fund 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 Icon Financial i.e., Icon Financial and L Abbett go up and down completely randomly.
Pair Corralation between Icon Financial and L Abbett
Assuming the 90 days horizon Icon Financial is expected to generate 9.81 times less return on investment than L Abbett. In addition to that, Icon Financial is 1.63 times more volatile than L Abbett Fundamental. It trades about 0.01 of its total potential returns per unit of risk. L Abbett Fundamental is currently generating about 0.13 per unit of volatility. If you would invest 1,240 in L Abbett Fundamental on September 1, 2024 and sell it today you would earn a total of 379.00 from holding L Abbett Fundamental or generate 30.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Icon Financial Fund vs. L Abbett Fundamental
Performance |
| Timeline |
| Icon Financial |
| L Abbett Fundamental |
Icon Financial and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Financial and L Abbett
The main advantage of trading using opposite Icon Financial and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Financial 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.| Icon Financial vs. Nuveen Minnesota Municipal | Icon Financial vs. Bbh Intermediate Municipal | Icon Financial vs. Blrc Sgy Mnp | Icon Financial vs. T Rowe Price |
| L Abbett vs. Jhancock Disciplined Value | L Abbett vs. Touchstone Large Cap | L Abbett vs. M Large Cap | L Abbett vs. Tax Managed Large Cap |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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