Correlation Between L Abbett and Plumb Equity
Can any of the company-specific risk be diversified away by investing in both L Abbett and Plumb Equity 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 Plumb Equity 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 Plumb Equity, you can compare the effects of market volatilities on L Abbett and Plumb Equity 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 Plumb Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Plumb Equity.
Diversification Opportunities for L Abbett and Plumb Equity
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Plumb is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Plumb Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Equity 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 Plumb Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Equity has no effect on the direction of L Abbett i.e., L Abbett and Plumb Equity go up and down completely randomly.
Pair Corralation between L Abbett and Plumb Equity
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.33 times more return on investment than Plumb Equity. However, L Abbett is 1.33 times more volatile than Plumb Equity. It trades about 0.26 of its potential returns per unit of risk. Plumb Equity is currently generating about 0.18 per unit of risk. If you would invest 4,381 in L Abbett Growth on August 31, 2024 and sell it today you would earn a total of 363.00 from holding L Abbett Growth or generate 8.29% 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. Plumb Equity
Performance |
| Timeline |
| L Abbett Growth |
| Plumb Equity |
L Abbett and Plumb Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Plumb Equity
The main advantage of trading using opposite L Abbett and Plumb Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Plumb Equity 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 Plumb Equity will offset losses from the drop in Plumb Equity's long position.| L Abbett vs. Europacific Growth Fund | L Abbett vs. Washington Mutual Investors | L Abbett vs. Capital World Growth | L Abbett vs. HUMANA INC |
| Plumb Equity vs. T Rowe Price | Plumb Equity vs. Qs Growth Fund | Plumb Equity vs. L Abbett Growth | Plumb Equity vs. Small Midcap Dividend Income |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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