Correlation Between L Abbett and Mainstay Cbre

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

Diversification Opportunities for L Abbett and Mainstay Cbre

0.43

Correlation Coefficient

L Abbett  Mainstay Cbre

Very weak diversification

The 3 months correlation between LAVVX and Mainstay is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Mainstay Cbre Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Cbre Global 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 Mainstay Cbre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Cbre Global has no effect on the direction of L Abbett i.e., L Abbett and Mainstay Cbre go up and down completely randomly.

Pair Corralation between L Abbett and Mainstay Cbre

Assuming the 90 days horizon L Abbett Fundamental is expected to generate 1.05 times more return on investment than Mainstay Cbre. However, L Abbett is 1.05 times more volatile than Mainstay Cbre Global. It trades about 0.13 of its potential returns per unit of risk. Mainstay Cbre Global is currently generating about -0.07 per unit of risk. If you would invest  1,537  in L Abbett Fundamental on October 26, 2024 and sell it today you would earn a total of  94.00  from holding L Abbett Fundamental or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

L Abbett Fundamental  vs.  Mainstay Cbre Global

L Abbett Fundamental

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mainstay Cbre Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mainstay Cbre Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Mainstay Cbre 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 Mainstay Cbre

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

The idea behind L Abbett Fundamental and Mainstay Cbre Global 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.