Correlation Between Commodities Strategy and L Abbett
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy 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 Commodities Strategy and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and L Abbett Fundamental, you can compare the effects of market volatilities on Commodities Strategy 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 Commodities Strategy with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and L Abbett.
Diversification Opportunities for Commodities Strategy and L Abbett
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commodities and LAVVX is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund 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 Commodities Strategy 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 Commodities Strategy Fund 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 Commodities Strategy i.e., Commodities Strategy and L Abbett go up and down completely randomly.
Pair Corralation between Commodities Strategy and L Abbett
Assuming the 90 days horizon Commodities Strategy Fund is expected to generate 1.49 times more return on investment than L Abbett. However, Commodities Strategy is 1.49 times more volatile than L Abbett Fundamental. It trades about 0.06 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about -0.06 per unit of risk. If you would invest 2,926 in Commodities Strategy Fund on September 19, 2024 and sell it today you would earn a total of 25.00 from holding Commodities Strategy Fund or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. L Abbett Fundamental
Performance |
| Timeline |
| Commodities Strategy |
| L Abbett Fundamental |
Commodities Strategy and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and L Abbett
The main advantage of trading using opposite Commodities Strategy and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Real Estate Fund | Commodities Strategy vs. Precious Metals Fund |
| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate Fund |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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