Correlation Between Ab E and L Abbett

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

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

Diversification Opportunities for Ab E and L Abbett

-0.13

Correlation Coefficient

Ab E  L Abbett

Good diversification

The 3 months correlation between ADGAX and LGLUX is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ab E Opportunities 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 Ab E 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 Ab E Opportunities 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 Ab E i.e., Ab E and L Abbett go up and down completely randomly.

Pair Corralation between Ab E and L Abbett

Assuming the 90 days horizon Ab E Opportunities is expected to under-perform the L Abbett. In addition to that, Ab E is 1.48 times more volatile than L Abbett Growth. It trades about -0.25 of its total potential returns per unit of risk. L Abbett Growth is currently generating about 0.06 per unit of volatility. If you would invest  5,115  in L Abbett Growth on October 10, 2024 and sell it today you would earn a total of  89.00  from holding L Abbett Growth or generate 1.74% return on investment over 90 days.

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

Ab E Opportunities  vs.  L Abbett Growth

Ab E Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab E Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

L Abbett Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab E and L Abbett

The main advantage of trading using opposite Ab E and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab E 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 Ab E Opportunities and L Abbett Growth 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.