Correlation Between L Abbett and Science Technology

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Can any of the company-specific risk be diversified away by investing in both L Abbett and Science Technology 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 L Abbett and Science Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Abbett Fundamental and Science Technology Fund, you can compare the effects of market volatilities on L Abbett and Science Technology 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 L Abbett with a short position of Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Science Technology.

Diversification Opportunities for L Abbett and Science Technology

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between LAVVX and Science is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology and L 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 L Abbett Fundamental are associated (or correlated) with Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of L Abbett i.e., L Abbett and Science Technology go up and down completely randomly.

Pair Corralation between L Abbett and Science Technology

Assuming the 90 days horizon L Abbett Fundamental is expected to under-perform the Science Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, L Abbett Fundamental is 2.76 times less risky than Science Technology. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Science Technology Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,841  in Science Technology Fund on September 15, 2024 and sell it today you would earn a total of  115.00  from holding Science Technology Fund or generate 4.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

L Abbett Fundamental  vs.  Science Technology Fund

 Performance 
       Timeline  
L Abbett Fundamental 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, L Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Science Technology 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Science Technology showed solid returns over the last few months and may actually be approaching a breakup point.

L Abbett and Science Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with L Abbett and Science Technology

The main advantage of trading using opposite L Abbett and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Science Technology 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 Science Technology will offset losses from the drop in Science Technology's long position.
The idea behind L Abbett Fundamental and Science Technology Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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