Correlation Between Vanguard Small-cap and L Abbett
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap 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 Vanguard Small-cap and L 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 Growth and L Abbett Growth, you can compare the effects of market volatilities on Vanguard Small-cap 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 Vanguard Small-cap with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and L Abbett.
Diversification Opportunities for Vanguard Small-cap and L Abbett
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and LGLSX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth 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 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 Growth 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 Vanguard Small-cap i.e., Vanguard Small-cap and L Abbett go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and L Abbett
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.39 times less return on investment than L Abbett. But when comparing it to its historical volatility, Vanguard Small Cap Growth is 1.19 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 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,142 in L Abbett Growth on September 2, 2024 and sell it today you would earn a total of 1,647 from holding L Abbett Growth or generate 52.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. L Abbett Growth
Performance |
| Timeline |
| Vanguard Small Cap |
| L Abbett Growth |
Vanguard Small-cap and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and L Abbett
The main advantage of trading using opposite Vanguard Small-cap and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap 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.| Vanguard Small-cap vs. Dws Emerging Markets | Vanguard Small-cap vs. Pace International Emerging | Vanguard Small-cap vs. Transamerica Emerging Markets | Vanguard Small-cap vs. Siit Emerging Markets |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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