Correlation Between Amg Managers and L Abbett

Can any of the company-specific risk be diversified away by investing in both Amg Managers 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 Amg Managers and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amg Managers Fairpointe and L Abbett Fundamental, you can compare the effects of market volatilities on Amg Managers 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 Amg Managers with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and L Abbett.

Diversification Opportunities for Amg Managers and L Abbett

0.89

Correlation Coefficient

Amg Managers  L Abbett

Very poor diversification

The 3 months correlation between Amg and LAVVX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Fairpointe 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 Amg Managers 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 Amg Managers Fairpointe 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 Amg Managers i.e., Amg Managers and L Abbett go up and down completely randomly.

Pair Corralation between Amg Managers and L Abbett

Assuming the 90 days horizon Amg Managers Fairpointe is expected to under-perform the L Abbett. In addition to that, Amg Managers is 1.05 times more volatile than L Abbett Fundamental. It trades about -0.02 of its total potential returns per unit of risk. L Abbett Fundamental is currently generating about 0.02 per unit of volatility. If you would invest  1,558  in L Abbett Fundamental on December 26, 2024 and sell it today you would earn a total of  11.00  from holding L Abbett Fundamental or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amg Managers Fairpointe  vs.  L Abbett Fundamental

Amg Managers Fairpointe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Managers Fairpointe has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

L Abbett Fundamental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, L Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg Managers and L Abbett

The main advantage of trading using opposite Amg Managers and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg Managers 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.

The idea behind Amg Managers Fairpointe and L Abbett Fundamental pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.