Correlation Between Smallcap Fund and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Smallcap Fund 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 Smallcap Fund and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Fund Fka and Lord Abbett Health, you can compare the effects of market volatilities on Smallcap Fund 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 Smallcap Fund with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Fund and Lord Abbett.
Diversification Opportunities for Smallcap Fund and Lord Abbett
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smallcap and Lord is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Lord Abbett Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Health and Smallcap Fund 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 Smallcap Fund Fka 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 Health has no effect on the direction of Smallcap Fund i.e., Smallcap Fund and Lord Abbett go up and down completely randomly.
Pair Corralation between Smallcap Fund and Lord Abbett
Assuming the 90 days horizon Smallcap Fund Fka is expected to generate 1.12 times more return on investment than Lord Abbett. However, Smallcap Fund is 1.12 times more volatile than Lord Abbett Health. It trades about 0.19 of its potential returns per unit of risk. Lord Abbett Health is currently generating about 0.17 per unit of risk. If you would invest 2,563 in Smallcap Fund Fka on November 8, 2024 and sell it today you would earn a total of 110.00 from holding Smallcap Fund Fka or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Fund Fka vs. Lord Abbett Health
Performance |
| Timeline |
| Smallcap Fund Fka |
| Lord Abbett Health |
Smallcap Fund and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Fund and Lord Abbett
The main advantage of trading using opposite Smallcap Fund and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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.| Smallcap Fund vs. City National Rochdale | Smallcap Fund vs. Buffalo High Yield | Smallcap Fund vs. Strategic Advisers Income | Smallcap Fund vs. Prudential High Yield |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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