Correlation Between L Abbett and Ab Small
Can any of the company-specific risk be diversified away by investing in both L Abbett and Ab Small 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 Ab Small 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 Ab Small Cap, you can compare the effects of market volatilities on L Abbett and Ab Small 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 Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Ab Small.
Diversification Opportunities for L Abbett and Ab Small
Very poor diversification
The 3 months correlation between LGLSX and SCYVX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of L Abbett i.e., L Abbett and Ab Small go up and down completely randomly.
Pair Corralation between L Abbett and Ab Small
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.1 times more return on investment than Ab Small. However, L Abbett is 1.1 times more volatile than Ab Small Cap. It trades about 0.11 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.06 per unit of risk. If you would invest 2,920 in L Abbett Growth on September 2, 2024 and sell it today you would earn a total of 1,869 from holding L Abbett Growth or generate 64.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. Ab Small Cap
Performance |
| Timeline |
| L Abbett Growth |
| Ab Small Cap |
L Abbett and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Ab Small
The main advantage of trading using opposite L Abbett and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Ab Small 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 Ab Small will offset losses from the drop in Ab Small's long position.| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate Fund |
| Ab Small vs. American Funds Conservative | Ab Small vs. Jhancock Diversified Macro | Ab Small vs. Aqr Diversified Arbitrage | Ab Small vs. Calvert Conservative Allocation |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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