Correlation Between L Abbett and American Century
Can any of the company-specific risk be diversified away by investing in both L Abbett and American Century 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 Century 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 Century Investment, you can compare the effects of market volatilities on L Abbett and American Century 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 Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and American Century.
Diversification Opportunities for L Abbett and American Century
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGLSX and American is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and American Century Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Inv 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 Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Inv has no effect on the direction of L Abbett i.e., L Abbett and American Century go up and down completely randomly.
Pair Corralation between L Abbett and American Century
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.37 times more return on investment than American Century. However, L Abbett is 1.37 times more volatile than American Century Investment. It trades about 0.11 of its potential returns per unit of risk. American Century Investment is currently generating about 0.02 per unit of risk. If you would invest 2,438 in L Abbett Growth on September 14, 2024 and sell it today you would earn a total of 2,476 from holding L Abbett Growth or generate 101.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
L Abbett Growth vs. American Century Investment
Performance |
| Timeline |
| L Abbett Growth |
| American Century Inv |
L Abbett and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and American Century
The main advantage of trading using opposite L Abbett and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, American Century 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 Century will offset losses from the drop in American Century's long position.| L Abbett vs. Barings Global Floating | L Abbett vs. Dreyfusstandish Global Fixed | L Abbett vs. Ab Global Risk | L Abbett vs. Artisan Global Unconstrained |
| American Century vs. Pace Municipal Fixed | American Century vs. Dws Government Money | American Century vs. Transamerica Intermediate Muni | American Century vs. T Rowe Price |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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