Correlation Between L Abbett and American Mutual
Can any of the company-specific risk be diversified away by investing in both L Abbett and American Mutual 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 American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Abbett Growth and American Mutual Fund, you can compare the effects of market volatilities on L Abbett and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and American Mutual.
Diversification Opportunities for L Abbett and American Mutual
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGLSX and American is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 Growth are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of L Abbett i.e., L Abbett and American Mutual go up and down completely randomly.
Pair Corralation between L Abbett and American Mutual
Assuming the 90 days horizon L Abbett Growth is expected to generate 2.23 times more return on investment than American Mutual. However, L Abbett is 2.23 times more volatile than American Mutual Fund. It trades about 0.11 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 per unit of risk. If you would invest 2,473 in L Abbett Growth on September 12, 2024 and sell it today you would earn a total of 2,391 from holding L Abbett Growth or generate 96.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. American Mutual Fund
Performance |
| Timeline |
| L Abbett Growth |
| American Mutual |
L Abbett and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and American Mutual
The main advantage of trading using opposite L Abbett and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| L Abbett vs. Dreyfus Technology Growth | L Abbett vs. Pgim Jennison Technology | L Abbett vs. Fidelity Advisor Technology | L Abbett vs. Global Technology Portfolio |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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