Correlation Between Lord Abbett and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Auer Growth 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 Lord Abbett and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Diversified and Auer Growth Fund, you can compare the effects of market volatilities on Lord Abbett and Auer Growth 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 Lord Abbett with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Auer Growth.
Diversification Opportunities for Lord Abbett and Auer Growth
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Auer is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and Lord 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 Lord Abbett Diversified are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Lord Abbett i.e., Lord Abbett and Auer Growth go up and down completely randomly.
Pair Corralation between Lord Abbett and Auer Growth
Assuming the 90 days horizon Lord Abbett is expected to generate 2.28 times less return on investment than Auer Growth. But when comparing it to its historical volatility, Lord Abbett Diversified is 2.95 times less risky than Auer Growth. It trades about 0.12 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,202 in Auer Growth Fund on August 29, 2024 and sell it today you would earn a total of 560.00 from holding Auer Growth Fund or generate 46.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Auer Growth Fund
Performance |
| Timeline |
| Lord Abbett Diversified |
| Auer Growth Fund |
Lord Abbett and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Auer Growth
The main advantage of trading using opposite Lord Abbett and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| Lord Abbett vs. Towpath Technology | Lord Abbett vs. Invesco Technology Fund | Lord Abbett vs. Biotechnology Ultrasector Profund | Lord Abbett vs. Pgim Jennison Technology |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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