Correlation Between Floating Rate and L Abbett
Can any of the company-specific risk be diversified away by investing in both Floating Rate 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 Floating Rate and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and L Abbett Growth, you can compare the effects of market volatilities on Floating Rate 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 Floating Rate with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and L Abbett.
Diversification Opportunities for Floating Rate and L Abbett
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Floating and LGLUX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund 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 Floating Rate 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 Floating Rate 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 Growth has no effect on the direction of Floating Rate i.e., Floating Rate and L Abbett go up and down completely randomly.
Pair Corralation between Floating Rate and L Abbett
Assuming the 90 days horizon Floating Rate is expected to generate 6.94 times less return on investment than L Abbett. But when comparing it to its historical volatility, Floating Rate Fund is 9.76 times less risky than L Abbett. It trades about 0.18 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,001 in L Abbett Growth on August 29, 2024 and sell it today you would earn a total of 987.00 from holding L Abbett Growth or generate 24.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floating Rate Fund vs. L Abbett Growth
Performance |
| Timeline |
| Floating Rate |
| L Abbett Growth |
Floating Rate and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and L Abbett
The main advantage of trading using opposite Floating Rate and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate 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.| Floating Rate vs. Floating Rate Fund | Floating Rate vs. Lord Abbett Inv | Floating Rate vs. HUMANA INC | Floating Rate vs. Aquagold International |
| L Abbett vs. Growth Fund Of | L Abbett vs. HUMANA INC | L Abbett vs. Aquagold International | L Abbett vs. Barloworld Ltd ADR |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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