Correlation Between Science Technology and L Abbett
Can any of the company-specific risk be diversified away by investing in both Science Technology 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 Science Technology and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Technology Fund and L Abbett Fundamental, you can compare the effects of market volatilities on Science Technology 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 Science Technology with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Technology and L Abbett.
Diversification Opportunities for Science Technology and L Abbett
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCIENCE and LAVVX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Science Technology 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 Science Technology 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 Science Technology 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 Science Technology i.e., Science Technology and L Abbett go up and down completely randomly.
Pair Corralation between Science Technology and L Abbett
Assuming the 90 days horizon Science Technology Fund is expected to generate 0.93 times more return on investment than L Abbett. However, Science Technology Fund is 1.07 times less risky than L Abbett. It trades about 0.18 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about -0.02 per unit of risk. If you would invest 2,922 in Science Technology Fund on August 31, 2024 and sell it today you would earn a total of 172.00 from holding Science Technology Fund or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Technology Fund vs. L Abbett Fundamental
Performance |
| Timeline |
| Science Technology |
| L Abbett Fundamental |
Science Technology and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Technology and L Abbett
The main advantage of trading using opposite Science Technology and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Technology 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.| Science Technology vs. Aggressive Growth Fund | Science Technology vs. Sp 500 Index | Science Technology vs. Nasdaq 100 Index Fund | Science Technology vs. International Fund International |
| L Abbett vs. Goldman Sachs Technology | L Abbett vs. Science Technology Fund | L Abbett vs. Allianzgi Technology Fund | L Abbett vs. Towpath Technology |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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