Correlation Between Profunds-large Cap and L Abbett
Can any of the company-specific risk be diversified away by investing in both Profunds-large Cap and L Abbett 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 Profunds-large Cap and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profunds Large Cap Growth and L Abbett Growth, you can compare the effects of market volatilities on Profunds-large Cap and L Abbett 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 Profunds-large Cap with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds-large Cap and L Abbett.
Diversification Opportunities for Profunds-large Cap and L Abbett
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Profunds-large and LGLSX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth and Profunds-large Cap 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 Profunds Large Cap Growth are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of Profunds-large Cap i.e., Profunds-large Cap and L Abbett go up and down completely randomly.
Pair Corralation between Profunds-large Cap and L Abbett
Assuming the 90 days horizon Profunds Large Cap Growth is expected to generate 0.8 times more return on investment than L Abbett. However, Profunds Large Cap Growth is 1.25 times less risky than L Abbett. It trades about -0.17 of its potential returns per unit of risk. L Abbett Growth is currently generating about -0.17 per unit of risk. If you would invest 3,654 in Profunds Large Cap Growth on October 16, 2024 and sell it today you would lose (164.00) from holding Profunds Large Cap Growth or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Profunds Large Cap Growth vs. L Abbett Growth
Performance |
| Timeline |
| Profunds Large Cap |
| L Abbett Growth |
Profunds-large Cap and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds-large Cap and L Abbett
The main advantage of trading using opposite Profunds-large Cap and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds-large Cap position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett's long position.| Profunds-large Cap vs. Eventide Healthcare Life | Profunds-large Cap vs. Blackrock Health Sciences | Profunds-large Cap vs. Highland Longshort Healthcare | Profunds-large Cap vs. Fidelity Advisor Health |
| L Abbett vs. Inverse Government Long | L Abbett vs. Morningstar Municipal Bond | L Abbett vs. Equalize Community Development | L Abbett vs. Blrc Sgy Mnp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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