Correlation Between Small Company and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Small Company and Lord 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 Small Company and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Lord Abbett Growth, you can compare the effects of market volatilities on Small Company and Lord 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 Small Company with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Lord Abbett.
Diversification Opportunities for Small Company and Lord Abbett
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and Lord is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth and Small Company 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 Small Pany Growth are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Growth has no effect on the direction of Small Company i.e., Small Company and Lord Abbett go up and down completely randomly.
Pair Corralation between Small Company and Lord Abbett
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.41 times more return on investment than Lord Abbett. However, Small Company is 1.41 times more volatile than Lord Abbett Growth. It trades about 0.66 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.48 per unit of risk. If you would invest 1,285 in Small Pany Growth on September 3, 2024 and sell it today you would earn a total of 384.00 from holding Small Pany Growth or generate 29.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Lord Abbett Growth
Performance |
| Timeline |
| Small Pany Growth |
| Lord Abbett Growth |
Small Company and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Lord Abbett
The main advantage of trading using opposite Small Company and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Lord 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Lord Abbett vs. Fpa Queens Road | Lord Abbett vs. Lord Abbett Small | Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Ab Discovery Value |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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