Correlation Between Vanguard Small-cap and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap 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 Vanguard Small-cap and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Lord Abbett Global, you can compare the effects of market volatilities on Vanguard Small-cap 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 Vanguard Small-cap with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Lord Abbett.
Diversification Opportunities for Vanguard Small-cap and Lord Abbett
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Lord is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Lord Abbett Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Global and Vanguard Small-cap 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 Vanguard Small Cap Value 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 Global has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Lord Abbett go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Lord Abbett
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.36 times more return on investment than Lord Abbett. However, Vanguard Small-cap is 1.36 times more volatile than Lord Abbett Global. It trades about 0.18 of its potential returns per unit of risk. Lord Abbett Global is currently generating about 0.12 per unit of risk. If you would invest 4,634 in Vanguard Small Cap Value on September 3, 2024 and sell it today you would earn a total of 544.00 from holding Vanguard Small Cap Value or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Lord Abbett Global
Performance |
| Timeline |
| Vanguard Small Cap |
| Lord Abbett Global |
Vanguard Small-cap and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Lord Abbett
The main advantage of trading using opposite Vanguard Small-cap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap 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.| Vanguard Small-cap vs. T Rowe Price | Vanguard Small-cap vs. Fm Investments Large | Vanguard Small-cap vs. Touchstone Large Cap | Vanguard Small-cap vs. Semiconductor Ultrasector Profund |
| Lord Abbett vs. Columbia Small Cap | Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Ultrasmall Cap Profund Ultrasmall Cap | Lord Abbett vs. Amg River Road |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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