Correlation Between Arrow Managed and L Abbett
Can any of the company-specific risk be diversified away by investing in both Arrow Managed 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 Arrow Managed and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Managed Futures and L Abbett Growth, you can compare the effects of market volatilities on Arrow Managed 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 Arrow Managed with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and L Abbett.
Diversification Opportunities for Arrow Managed and L Abbett
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and LGLSX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures 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 Arrow Managed 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 Arrow Managed Futures 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 Arrow Managed i.e., Arrow Managed and L Abbett go up and down completely randomly.
Pair Corralation between Arrow Managed and L Abbett
Assuming the 90 days horizon Arrow Managed is expected to generate 5.17 times less return on investment than L Abbett. But when comparing it to its historical volatility, Arrow Managed Futures is 1.32 times less risky than L Abbett. It trades about 0.02 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,862 in L Abbett Growth on October 24, 2024 and sell it today you would earn a total of 108.00 from holding L Abbett Growth or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. L Abbett Growth
Performance |
| Timeline |
| Arrow Managed Futures |
| L Abbett Growth |
Arrow Managed and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and L Abbett
The main advantage of trading using opposite Arrow Managed and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed 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.| Arrow Managed vs. Leader Short Term Bond | Arrow Managed vs. Nuveen Strategic Municipal | Arrow Managed vs. Ambrus Core Bond | Arrow Managed vs. Artisan High Income |
| L Abbett vs. Small Pany Growth | L Abbett vs. Needham Aggressive Growth | L Abbett vs. Glg Intl Small | L Abbett vs. Vy Columbia Small |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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