Correlation Between Balanced Fund and L Abbett

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

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

Diversification Opportunities for Balanced Fund and L Abbett

0.19

Correlation Coefficient

Balanced Fund  L Abbett

Average diversification

The 3 months correlation between Balanced and LGLSX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail 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 Balanced Fund 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 Balanced Fund Retail 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 Balanced Fund i.e., Balanced Fund and L Abbett go up and down completely randomly.

Pair Corralation between Balanced Fund and L Abbett

Assuming the 90 days horizon Balanced Fund Retail is expected to under-perform the L Abbett. In addition to that, Balanced Fund is 1.27 times more volatile than L Abbett Growth. It trades about -0.09 of its total potential returns per unit of risk. L Abbett Growth is currently generating about 0.27 per unit of volatility. If you would invest  4,019  in L Abbett Growth on September 16, 2024 and sell it today you would earn a total of  876.00  from holding L Abbett Growth or generate 21.8% return on investment over 90 days.

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

Balanced Fund Retail  vs.  L Abbett Growth

Balanced Fund Retail

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Balanced Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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

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 Balanced Fund and L Abbett

The main advantage of trading using opposite Balanced Fund and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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 Balanced Fund Retail 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.