Correlation Between L Abbett and Wilmington Diversified

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Can any of the company-specific risk be diversified away by investing in both L Abbett and Wilmington Diversified 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 Wilmington Diversified 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 Wilmington Diversified Income, you can compare the effects of market volatilities on L Abbett and Wilmington Diversified 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 Wilmington Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Wilmington Diversified.

Diversification Opportunities for L Abbett and Wilmington Diversified

LGLSXWilmingtonDiversified AwayLGLSXWilmingtonDiversified Away100%
0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between LGLSX and Wilmington is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Wilmington Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Diversified 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 Wilmington Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Diversified has no effect on the direction of L Abbett i.e., L Abbett and Wilmington Diversified go up and down completely randomly.

Pair Corralation between L Abbett and Wilmington Diversified

Assuming the 90 days horizon L Abbett Growth is expected to generate 3.05 times more return on investment than Wilmington Diversified. However, L Abbett is 3.05 times more volatile than Wilmington Diversified Income. It trades about 0.15 of its potential returns per unit of risk. Wilmington Diversified Income is currently generating about 0.15 per unit of risk. If you would invest  4,893  in L Abbett Growth on November 18, 2024 and sell it today you would earn a total of  257.00  from holding L Abbett Growth or generate 5.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

L Abbett Growth  vs.  Wilmington Diversified Income

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15LGLSX WDIAX
       Timeline  
L Abbett Growth 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb464748495051
Wilmington Diversified 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Diversified Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wilmington Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1313.213.413.613.814

L Abbett and Wilmington Diversified Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.82-3.64-2.45-1.27-0.08031.162.43.654.896.14 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15LGLSX WDIAX
       Returns  

Pair Trading with L Abbett and Wilmington Diversified

The main advantage of trading using opposite L Abbett and Wilmington Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Wilmington Diversified 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 Wilmington Diversified will offset losses from the drop in Wilmington Diversified's long position.
The idea behind L Abbett Growth and Wilmington Diversified Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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