Correlation Between Needham Growth and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Needham Growth 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 Needham Growth and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Growth and Lord Abbett Affiliated, you can compare the effects of market volatilities on Needham Growth 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 Needham Growth with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Growth and Lord Abbett.
Diversification Opportunities for Needham Growth and Lord Abbett
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Needham and Lord is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Needham Growth and Lord Abbett Affiliated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Affiliated and Needham Growth 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 Needham 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 Affiliated has no effect on the direction of Needham Growth i.e., Needham Growth and Lord Abbett go up and down completely randomly.
Pair Corralation between Needham Growth and Lord Abbett
Assuming the 90 days horizon Needham Growth is expected to generate 2.31 times more return on investment than Lord Abbett. However, Needham Growth is 2.31 times more volatile than Lord Abbett Affiliated. It trades about 0.04 of its potential returns per unit of risk. Lord Abbett Affiliated is currently generating about 0.09 per unit of risk. If you would invest 5,716 in Needham Growth on September 12, 2024 and sell it today you would earn a total of 1,174 from holding Needham Growth or generate 20.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Needham Growth vs. Lord Abbett Affiliated
Performance |
Timeline |
Needham Growth |
Lord Abbett Affiliated |
Needham Growth and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Needham Growth and Lord Abbett
The main advantage of trading using opposite Needham Growth and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Growth 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.Needham Growth vs. Lord Abbett Affiliated | Needham Growth vs. Dana Large Cap | Needham Growth vs. Avantis Large Cap | Needham Growth vs. Virtus Nfj Large Cap |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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