Correlation Between Mfs Lifetime and L Abbett
Can any of the company-specific risk be diversified away by investing in both Mfs Lifetime 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 Mfs Lifetime and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Lifetime 2040 and L Abbett Fundamental, you can compare the effects of market volatilities on Mfs Lifetime 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 Mfs Lifetime with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Lifetime and L Abbett.
Diversification Opportunities for Mfs Lifetime and L Abbett
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and LAVVX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Lifetime 2040 and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental and Mfs Lifetime 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 Mfs Lifetime 2040 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 Fundamental has no effect on the direction of Mfs Lifetime i.e., Mfs Lifetime and L Abbett go up and down completely randomly.
Pair Corralation between Mfs Lifetime and L Abbett
Assuming the 90 days horizon Mfs Lifetime 2040 is expected to generate 0.78 times more return on investment than L Abbett. However, Mfs Lifetime 2040 is 1.28 times less risky than L Abbett. It trades about 0.08 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about -0.03 per unit of risk. If you would invest 2,016 in Mfs Lifetime 2040 on September 14, 2024 and sell it today you would earn a total of 14.00 from holding Mfs Lifetime 2040 or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mfs Lifetime 2040 vs. L Abbett Fundamental
Performance |
| Timeline |
| Mfs Lifetime 2040 |
| L Abbett Fundamental |
Mfs Lifetime and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Lifetime and L Abbett
The main advantage of trading using opposite Mfs Lifetime and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Lifetime 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.| Mfs Lifetime vs. Wasatch Small Cap | Mfs Lifetime vs. Aqr Diversified Arbitrage | Mfs Lifetime vs. Massmutual Premier Diversified | Mfs Lifetime vs. Pimco Diversified Income |
| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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