Correlation Between L Abbett and State Street
Can any of the company-specific risk be diversified away by investing in both L Abbett and State Street 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 State Street 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 State Street Smallmid, you can compare the effects of market volatilities on L Abbett and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and State Street.
Diversification Opportunities for L Abbett and State Street
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and State is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and State Street Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Smallmid 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Smallmid has no effect on the direction of L Abbett i.e., L Abbett and State Street go up and down completely randomly.
Pair Corralation between L Abbett and State Street
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.02 times more return on investment than State Street. However, L Abbett is 1.02 times more volatile than State Street Smallmid. It trades about 0.33 of its potential returns per unit of risk. State Street Smallmid is currently generating about 0.33 per unit of risk. If you would invest 4,337 in L Abbett Growth on August 29, 2024 and sell it today you would earn a total of 446.00 from holding L Abbett Growth or generate 10.28% 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. State Street Smallmid
Performance |
| Timeline |
| L Abbett Growth |
| State Street Smallmid |
L Abbett and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and State Street
The main advantage of trading using opposite L Abbett and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| L Abbett vs. Tiaa Cref Lifecycle Retirement | L Abbett vs. American Funds Retirement | L Abbett vs. Target Retirement 2040 | L Abbett vs. Fidelity Managed Retirement |
| State Street vs. State Street Target | State Street vs. State Street Target | State Street vs. Ssga International Stock | State Street vs. State Street Target |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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