Correlation Between L Abbett and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both L Abbett and Columbia Seligman 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 Columbia Seligman 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 Columbia Seligman Global, you can compare the effects of market volatilities on L Abbett and Columbia Seligman 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 Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Columbia Seligman.
Diversification Opportunities for L Abbett and Columbia Seligman
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Columbia is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global 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 Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of L Abbett i.e., L Abbett and Columbia Seligman go up and down completely randomly.
Pair Corralation between L Abbett and Columbia Seligman
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.05 times more return on investment than Columbia Seligman. However, L Abbett is 1.05 times more volatile than Columbia Seligman Global. It trades about 0.14 of its potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.1 per unit of risk. If you would invest 2,944 in L Abbett Growth on September 1, 2024 and sell it today you would earn a total of 1,800 from holding L Abbett Growth or generate 61.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
L Abbett Growth vs. Columbia Seligman Global
Performance |
| Timeline |
| L Abbett Growth |
| Columbia Seligman Global |
L Abbett and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Columbia Seligman
The main advantage of trading using opposite L Abbett and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Columbia Seligman 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 Columbia Seligman will offset losses from the drop in Columbia Seligman's long position.| L Abbett vs. Metropolitan West High | L Abbett vs. Franklin High Income | L Abbett vs. T Rowe Price | L Abbett vs. California High Yield Municipal |
| Columbia Seligman vs. Multi Manager High Yield | Columbia Seligman vs. Virtus High Yield | Columbia Seligman vs. Federated Institutional High | Columbia Seligman vs. Fidelity Capital 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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