Correlation Between L Abbett and Gabelli Asset

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

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

Diversification Opportunities for L Abbett and Gabelli Asset

0.52

Correlation Coefficient

L Abbett  Gabelli Asset

Very weak diversification

The 3 months correlation between LAVVX and Gabelli is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and The Gabelli Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Asset and L Abbett 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 L Abbett Fundamental are associated (or correlated) with Gabelli Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Asset has no effect on the direction of L Abbett i.e., L Abbett and Gabelli Asset go up and down completely randomly.

Pair Corralation between L Abbett and Gabelli Asset

Assuming the 90 days horizon L Abbett Fundamental is expected to generate 0.39 times more return on investment than Gabelli Asset. However, L Abbett Fundamental is 2.56 times less risky than Gabelli Asset. It trades about 0.02 of its potential returns per unit of risk. The Gabelli Asset is currently generating about -0.13 per unit of risk. If you would invest  1,533  in L Abbett Fundamental on October 9, 2024 and sell it today you would earn a total of  14.00  from holding L Abbett Fundamental or generate 0.91% return on investment over 90 days.

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

L Abbett Fundamental  vs.  The Gabelli Asset

L Abbett Fundamental

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, L Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gabelli Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Asset 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with L Abbett and Gabelli Asset

The main advantage of trading using opposite L Abbett and Gabelli Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Gabelli Asset 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 Gabelli Asset will offset losses from the drop in Gabelli Asset's long position.

The idea behind L Abbett Fundamental and The Gabelli Asset 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.