Correlation Between L Abbett and Nationwide International
Can any of the company-specific risk be diversified away by investing in both L Abbett and Nationwide International 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 Nationwide International 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 Nationwide International Index, you can compare the effects of market volatilities on L Abbett and Nationwide International 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 Nationwide International. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Nationwide International.
Diversification Opportunities for L Abbett and Nationwide International
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGLSX and Nationwide is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Nationwide International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International 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 Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of L Abbett i.e., L Abbett and Nationwide International go up and down completely randomly.
Pair Corralation between L Abbett and Nationwide International
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.66 times more return on investment than Nationwide International. However, L Abbett is 1.66 times more volatile than Nationwide International Index. It trades about 0.13 of its potential returns per unit of risk. Nationwide International Index is currently generating about -0.01 per unit of risk. If you would invest 3,830 in L Abbett Growth on September 1, 2024 and sell it today you would earn a total of 959.00 from holding L Abbett Growth or generate 25.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
L Abbett Growth vs. Nationwide International Index
Performance |
| Timeline |
| L Abbett Growth |
| Nationwide International |
L Abbett and Nationwide International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Nationwide International
The main advantage of trading using opposite L Abbett and Nationwide International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Nationwide International 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 Nationwide International will offset losses from the drop in Nationwide International's long position.| L Abbett vs. Metropolitan West High | L Abbett vs. Franklin High Income | L Abbett vs. T Rowe Price | L Abbett vs. California High Yield Municipal |
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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