Correlation Between Delaware Healthcare and L Abbett

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

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

Diversification Opportunities for Delaware Healthcare and L Abbett

-0.8

Correlation Coefficient

Delaware Healthcare  L Abbett

Pay attention - limited upside

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

Pair Corralation between Delaware Healthcare and L Abbett

Assuming the 90 days horizon Delaware Healthcare Fund is expected to under-perform the L Abbett. In addition to that, Delaware Healthcare is 1.47 times more volatile than L Abbett Growth. It trades about -0.17 of its total potential returns per unit of risk. L Abbett Growth is currently generating about 0.26 per unit of volatility. If you would invest  4,236  in L Abbett Growth on September 12, 2024 and sell it today you would earn a total of  856.00  from holding L Abbett Growth or generate 20.21% return on investment over 90 days.

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

Delaware Healthcare Fund  vs.  L Abbett Growth

Delaware Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delaware Healthcare Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

L Abbett Growth

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 20 (%) 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 Delaware Healthcare and L Abbett

The main advantage of trading using opposite Delaware Healthcare and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delaware Healthcare 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 Delaware Healthcare 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.