Correlation Between Growth Fund and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Growth 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 Growth 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 Growth Fund Of and Lord Abbett Growth, you can compare the effects of market volatilities on Growth 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 Growth Fund with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Lord Abbett.
Diversification Opportunities for Growth Fund and Lord Abbett
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Lord is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of 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 Growth 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 Growth Fund Of 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 Growth Fund i.e., Growth Fund and Lord Abbett go up and down completely randomly.
Pair Corralation between Growth Fund and Lord Abbett
Assuming the 90 days horizon Growth Fund is expected to generate 2.31 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Growth Fund Of is 1.65 times less risky than Lord Abbett. It trades about 0.33 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 2,550 in Lord Abbett Growth on September 2, 2024 and sell it today you would earn a total of 367.00 from holding Lord Abbett Growth or generate 14.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Lord Abbett Growth
Performance |
| Timeline |
| Growth Fund |
| Lord Abbett Growth |
Growth Fund and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Lord Abbett
The main advantage of trading using opposite Growth Fund and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth 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.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Smallcap World Fund | Growth Fund vs. American Balanced Fund |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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