Correlation Between Growth Fund and L Abbett
Can any of the company-specific risk be diversified away by investing in both Growth Fund and L 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 L 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 L Abbett Fundamental, you can compare the effects of market volatilities on Growth Fund and L 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and L Abbett.
Diversification Opportunities for Growth Fund and L Abbett
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and LAVVX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental 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 L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Fundamental has no effect on the direction of Growth Fund i.e., Growth Fund and L Abbett go up and down completely randomly.
Pair Corralation between Growth Fund and L Abbett
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.16 times more return on investment than L Abbett. However, Growth Fund is 1.16 times more volatile than L Abbett Fundamental. It trades about 0.12 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about 0.07 per unit of risk. If you would invest 4,704 in Growth Fund Of on August 30, 2024 and sell it today you would earn a total of 3,388 from holding Growth Fund Of or generate 72.02% 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. L Abbett Fundamental
Performance |
| Timeline |
| Growth Fund |
| L Abbett Fundamental |
Growth Fund and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and L Abbett
The main advantage of trading using opposite Growth Fund and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, L 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 L Abbett will offset losses from the drop in L Abbett's long position.| Growth Fund vs. Old Westbury Short Term | Growth Fund vs. Franklin Federal Limited Term | Growth Fund vs. Rbc Short Duration | Growth Fund vs. Aqr Long Short Equity |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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