Correlation Between M Large and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both M Large 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 M Large and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Lord Abbett Growth, you can compare the effects of market volatilities on M Large 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 M Large with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Lord Abbett.
Diversification Opportunities for M Large and Lord Abbett
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTCGX and Lord is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap 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 M Large 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 M Large Cap 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 M Large i.e., M Large and Lord Abbett go up and down completely randomly.
Pair Corralation between M Large and Lord Abbett
Assuming the 90 days horizon M Large is expected to generate 3.49 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, M Large Cap is 1.36 times less risky than Lord Abbett. It trades about 0.19 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 2,242 in Lord Abbett Growth on September 3, 2024 and sell it today you would earn a total of 328.00 from holding Lord Abbett Growth or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Large Cap vs. Lord Abbett Growth
Performance |
| Timeline |
| M Large Cap |
| Lord Abbett Growth |
M Large and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Large and Lord Abbett
The main advantage of trading using opposite M Large and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large 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.| M Large vs. Vanguard Total Stock | M Large vs. Vanguard 500 Index | M Large vs. Vanguard Total Stock | M Large vs. Vanguard Total Stock |
| Lord Abbett vs. Lord Abbett Intermediate | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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