Correlation Between Needham Growth and Lord Abbett

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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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Needham Growth  vs.  Lord Abbett Affiliated

 Performance 
       Timeline  
Needham Growth 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Needham Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Needham Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Lord Abbett Affiliated 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Affiliated are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
The idea behind Needham Growth and Lord Abbett Affiliated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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