Correlation Between L Abbett and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both L Abbett and Prudential Jennison 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 Prudential Jennison 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 Prudential Jennison Blend, you can compare the effects of market volatilities on L Abbett and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Prudential Jennison.
Diversification Opportunities for L Abbett and Prudential Jennison
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Prudential is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Prudential Jennison Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Blend 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Blend has no effect on the direction of L Abbett i.e., L Abbett and Prudential Jennison go up and down completely randomly.
Pair Corralation between L Abbett and Prudential Jennison
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.45 times more return on investment than Prudential Jennison. However, L Abbett is 1.45 times more volatile than Prudential Jennison Blend. It trades about 0.11 of its potential returns per unit of risk. Prudential Jennison Blend is currently generating about 0.1 per unit of risk. If you would invest 2,446 in L Abbett Growth on August 26, 2024 and sell it today you would earn a total of 2,337 from holding L Abbett Growth or generate 95.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. Prudential Jennison Blend
Performance |
| Timeline |
| L Abbett Growth |
| Prudential Jennison Blend |
L Abbett and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Prudential Jennison
The main advantage of trading using opposite L Abbett and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| L Abbett vs. Ms Global Fixed | L Abbett vs. Victory High Income | L Abbett vs. Rationalpier 88 Convertible | L Abbett vs. Maryland Tax Free Bond |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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