Correlation Between Growth Opportunities and L Abbett
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities 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 Opportunities 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 Opportunities Fund and L Abbett Growth, you can compare the effects of market volatilities on Growth Opportunities 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 Opportunities with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and L Abbett.
Diversification Opportunities for Growth Opportunities and L Abbett
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between GROWTH and LGLSX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth and Growth Opportunities 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 Opportunities 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 Growth has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and L Abbett go up and down completely randomly.
Pair Corralation between Growth Opportunities and L Abbett
Assuming the 90 days horizon Growth Opportunities is expected to generate 1.28 times less return on investment than L Abbett. But when comparing it to its historical volatility, Growth Opportunities Fund is 1.35 times less risky than L Abbett. It trades about 0.11 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,853 in L Abbett Growth on August 31, 2024 and sell it today you would earn a total of 1,891 from holding L Abbett Growth or generate 66.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Growth Opportunities Fund vs. L Abbett Growth
Performance |
| Timeline |
| Growth Opportunities |
| L Abbett Growth |
Growth Opportunities and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and L Abbett
The main advantage of trading using opposite Growth Opportunities and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities 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 Opportunities vs. Europacific Growth Fund | Growth Opportunities vs. Washington Mutual Investors | Growth Opportunities vs. Capital World Growth | Growth Opportunities vs. HUMANA INC |
| L Abbett vs. Europacific Growth Fund | L Abbett vs. Washington Mutual Investors | L Abbett vs. Capital World Growth | L Abbett vs. HUMANA INC |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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