Correlation Between Cullen Value and L Abbett

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

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

Diversification Opportunities for Cullen Value and L Abbett

0.8

Correlation Coefficient

Cullen Value  L Abbett

Very poor diversification

The 3 months correlation between Cullen and LGLSX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Value Fund 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 Cullen Value 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 Cullen Value Fund 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 Cullen Value i.e., Cullen Value and L Abbett go up and down completely randomly.

Pair Corralation between Cullen Value and L Abbett

Assuming the 90 days horizon Cullen Value Fund is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cullen Value Fund is 2.7 times less risky than L Abbett. The mutual fund trades about -0.21 of its potential returns per unit of risk. The L Abbett Growth is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,721  in L Abbett Growth on September 14, 2024 and sell it today you would earn a total of  193.00  from holding L Abbett Growth or generate 4.09% return on investment over 90 days.

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

Cullen Value Fund  vs.  L Abbett Growth

Cullen Value

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cullen Value Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cullen Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

L Abbett Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 21 (%) 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 Cullen Value and L Abbett

The main advantage of trading using opposite Cullen Value and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Value 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 Cullen Value Fund 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 CEOs Directory module to screen CEOs from public companies around the world.