Correlation Between L Abbett and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both L Abbett and Touchstone 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 Touchstone 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 Touchstone Small Cap, you can compare the effects of market volatilities on L Abbett and Touchstone 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Touchstone Small.
Diversification Opportunities for L Abbett and Touchstone Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LGLSX and Touchstone is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone 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 Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of L Abbett i.e., L Abbett and Touchstone Small go up and down completely randomly.
Pair Corralation between L Abbett and Touchstone Small
Assuming the 90 days horizon L Abbett Growth is expected to generate 0.86 times more return on investment than Touchstone Small. However, L Abbett Growth is 1.16 times less risky than Touchstone Small. It trades about 0.39 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.3 per unit of risk. If you would invest 4,274 in L Abbett Growth on September 1, 2024 and sell it today you would earn a total of 470.00 from holding L Abbett Growth or generate 11.0% 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. Touchstone Small Cap
Performance |
| Timeline |
| L Abbett Growth |
| Touchstone Small Cap |
L Abbett and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Touchstone Small
The main advantage of trading using opposite L Abbett and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Touchstone 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 Touchstone Small will offset losses from the drop in Touchstone Small'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 |
| Touchstone Small vs. Cutler Equity | Touchstone Small vs. Scharf Fund Retail | Touchstone Small vs. Huber Capital Equity | Touchstone Small vs. Icon Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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