Correlation Between Lord Abbett and Needham Growth
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Needham Growth 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 Lord Abbett and Needham Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Affiliated and Needham Growth, you can compare the effects of market volatilities on Lord Abbett and Needham Growth 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 Lord Abbett with a short position of Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Needham Growth.
Diversification Opportunities for Lord Abbett and Needham Growth
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lord and Needham is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Affiliated and Needham Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and Lord Abbett 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 Lord Abbett Affiliated are associated (or correlated) with Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Needham Growth go up and down completely randomly.
Pair Corralation between Lord Abbett and Needham Growth
Assuming the 90 days horizon Lord Abbett Affiliated is expected to generate 0.5 times more return on investment than Needham Growth. However, Lord Abbett Affiliated is 2.01 times less risky than Needham Growth. It trades about 0.07 of its potential returns per unit of risk. Needham Growth is currently generating about -0.04 per unit of risk. If you would invest 1,816 in Lord Abbett Affiliated on September 13, 2024 and sell it today you would earn a total of 131.00 from holding Lord Abbett Affiliated or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Lord Abbett Affiliated vs. Needham Growth
Performance |
| Timeline |
| Lord Abbett Affiliated |
| Needham Growth |
Lord Abbett and Needham Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Needham Growth
The main advantage of trading using opposite Lord Abbett and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Needham Growth 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 Needham Growth will offset losses from the drop in Needham Growth's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| Needham Growth vs. Needham Aggressive Growth | Needham Growth vs. Needham Aggressive Growth | Needham Growth vs. Needham Growth Fund | Needham Growth vs. Needham Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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