Correlation Between L Abbett and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both L Abbett and Sp Smallcap 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 Sp Smallcap 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 Sp Smallcap 600, you can compare the effects of market volatilities on L Abbett and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Sp Smallcap.
Diversification Opportunities for L Abbett and Sp Smallcap
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LGLSX and RYSVX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Sp Smallcap 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap 600 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap 600 has no effect on the direction of L Abbett i.e., L Abbett and Sp Smallcap go up and down completely randomly.
Pair Corralation between L Abbett and Sp Smallcap
Assuming the 90 days horizon L Abbett Growth is expected to generate 2.03 times more return on investment than Sp Smallcap. However, L Abbett is 2.03 times more volatile than Sp Smallcap 600. It trades about 0.1 of its potential returns per unit of risk. Sp Smallcap 600 is currently generating about 0.05 per unit of risk. If you would invest 4,762 in L Abbett Growth on November 3, 2024 and sell it today you would earn a total of 187.00 from holding L Abbett Growth or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. Sp Smallcap 600
Performance |
| Timeline |
| L Abbett Growth |
| Sp Smallcap 600 |
L Abbett and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Sp Smallcap
The main advantage of trading using opposite L Abbett and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.| L Abbett vs. Towpath Technology | L Abbett vs. Firsthand Technology Opportunities | L Abbett vs. Icon Information Technology | L Abbett vs. Columbia Global Technology |
| Sp Smallcap vs. Barings Active Short | Sp Smallcap vs. Touchstone Ultra Short | Sp Smallcap vs. Blackrock Short Obligations | Sp Smallcap vs. Blackrock Global Longshort |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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