Correlation Between L Abbett and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both L Abbett and Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on L Abbett and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Smallcap Growth.
Diversification Opportunities for L Abbett and Smallcap Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Smallcap is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of L Abbett i.e., L Abbett and Smallcap Growth go up and down completely randomly.
Pair Corralation between L Abbett and Smallcap Growth
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.14 times more return on investment than Smallcap Growth. However, L Abbett is 1.14 times more volatile than Smallcap Growth Fund. It trades about 0.11 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.07 per unit of risk. If you would invest 2,874 in L Abbett Growth on August 27, 2024 and sell it today you would earn a total of 1,909 from holding L Abbett Growth or generate 66.42% 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. Smallcap Growth Fund
Performance |
| Timeline |
| L Abbett Growth |
| Smallcap Growth |
L Abbett and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Smallcap Growth
The main advantage of trading using opposite L Abbett and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth's long position.| L Abbett vs. Blackrock High Yield | L Abbett vs. Prudential High Yield | L Abbett vs. Pioneer High Yield | L Abbett vs. Pia High Yield |
| Smallcap Growth vs. Small Pany Growth | Smallcap Growth vs. Crafword Dividend Growth | Smallcap Growth vs. Mid Cap Growth | Smallcap Growth vs. L Abbett Growth |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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