Correlation Between L Abbett and Tiaa-cref Equity
Can any of the company-specific risk be diversified away by investing in both L Abbett and Tiaa-cref 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 Tiaa-cref 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 Tiaa Cref Equity Index, you can compare the effects of market volatilities on L Abbett and Tiaa-cref 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 Tiaa-cref Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Tiaa-cref Equity.
Diversification Opportunities for L Abbett and Tiaa-cref Equity
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Tiaa-cref is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Tiaa Cref Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref 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 Tiaa-cref Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Equity has no effect on the direction of L Abbett i.e., L Abbett and Tiaa-cref Equity go up and down completely randomly.
Pair Corralation between L Abbett and Tiaa-cref Equity
Assuming the 90 days horizon L Abbett Growth is expected to generate 1.67 times more return on investment than Tiaa-cref Equity. However, L Abbett is 1.67 times more volatile than Tiaa Cref Equity Index. It trades about 0.11 of its potential returns per unit of risk. Tiaa Cref Equity Index is currently generating about 0.12 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. Tiaa Cref Equity Index
Performance |
| Timeline |
| L Abbett Growth |
| Tiaa Cref Equity |
L Abbett and Tiaa-cref Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Tiaa-cref Equity
The main advantage of trading using opposite L Abbett and Tiaa-cref Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Tiaa-cref 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 Tiaa-cref Equity will offset losses from the drop in Tiaa-cref Equity'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 |
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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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