Correlation Between L Abbett and The Short-term

Can any of the company-specific risk be diversified away by investing in both L Abbett and The Short-term 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 The Short-term 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 Short Term Municipal, you can compare the effects of market volatilities on L Abbett and The Short-term 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 The Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and The Short-term.

Diversification Opportunities for L Abbett and The Short-term

-0.02

Correlation Coefficient

L Abbett  The Short-term

Good diversification

The 3 months correlation between LAVVX and The is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and The Short Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Short-term 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 The Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Short-term has no effect on the direction of L Abbett i.e., L Abbett and The Short-term go up and down completely randomly.

Pair Corralation between L Abbett and The Short-term

Assuming the 90 days horizon L Abbett Fundamental is expected to under-perform the The Short-term. In addition to that, L Abbett is 7.97 times more volatile than The Short Term Municipal. It trades about -0.13 of its total potential returns per unit of risk. The Short Term Municipal is currently generating about -0.31 per unit of volatility. If you would invest  965.00  in The Short Term Municipal on October 12, 2024 and sell it today you would lose (6.00) from holding The Short Term Municipal or give up 0.62% of portfolio value over 90 days.

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

L Abbett Fundamental  vs.  The Short Term Municipal

L Abbett Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L Abbett Fundamental has generated negative risk-adjusted returns adding no value to fund investors. 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.

The Short-term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Short Term Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, The Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with L Abbett and The Short-term

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

The idea behind L Abbett Fundamental and The Short Term Municipal 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..