Correlation Between Royce Opportunity and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Royce Opportunity 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 Royce Opportunity and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Opportunity Fund and Lord Abbett Core, you can compare the effects of market volatilities on Royce Opportunity 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 Royce Opportunity with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Lord Abbett.
Diversification Opportunities for Royce Opportunity and Lord Abbett
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royce and Lord is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Lord Abbett Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Core and Royce Opportunity 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 Royce Opportunity Fund 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 Core has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Lord Abbett go up and down completely randomly.
Pair Corralation between Royce Opportunity and Lord Abbett
Assuming the 90 days horizon Royce Opportunity Fund is expected to generate 2.3 times more return on investment than Lord Abbett. However, Royce Opportunity is 2.3 times more volatile than Lord Abbett Core. It trades about 0.05 of its potential returns per unit of risk. Lord Abbett Core is currently generating about 0.04 per unit of risk. If you would invest 1,302 in Royce Opportunity Fund on September 12, 2024 and sell it today you would earn a total of 453.00 from holding Royce Opportunity Fund or generate 34.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Opportunity Fund vs. Lord Abbett Core
Performance |
| Timeline |
| Royce Opportunity |
| Lord Abbett Core |
Royce Opportunity and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Opportunity and Lord Abbett
The main advantage of trading using opposite Royce Opportunity and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Opportunity 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.| Royce Opportunity vs. Royce Micro Cap Fund | Royce Opportunity vs. Royce Total Return | Royce Opportunity vs. Royce Special Equity | Royce Opportunity vs. Longleaf Partners Fund |
| Lord Abbett vs. Metropolitan West Total | Lord Abbett vs. Metropolitan West Total | Lord Abbett vs. Pimco Total Return | Lord Abbett vs. Total Return 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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