Correlation Between Champlain Mid and Lord Abbett

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

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

Diversification Opportunities for Champlain Mid and Lord Abbett

0.93

Correlation Coefficient

Champlain Mid  Lord Abbett

Almost no diversification

The 3 months correlation between Champlain and Lord is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth and Champlain Mid 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 Champlain Mid Cap 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 Growth has no effect on the direction of Champlain Mid i.e., Champlain Mid and Lord Abbett go up and down completely randomly.

Pair Corralation between Champlain Mid and Lord Abbett

Assuming the 90 days horizon Champlain Mid is expected to generate 2.39 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Champlain Mid Cap is 1.6 times less risky than Lord Abbett. It trades about 0.08 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,340  in Lord Abbett Growth on September 4, 2024 and sell it today you would earn a total of  1,706  from holding Lord Abbett Growth or generate 51.08% return on investment over 90 days.

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

Champlain Mid Cap  vs.  Lord Abbett Growth

Champlain Mid Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Mid Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Champlain Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lord Abbett Growth

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Growth are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Lord Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champlain Mid and Lord Abbett

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

The idea behind Champlain Mid Cap and Lord 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.