Correlation Between L Abbett and Vanguard Intermediate

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

Diversification Opportunities for L Abbett and Vanguard Intermediate

0.38

Correlation Coefficient

L Abbett  Vanguard Intermediate

Weak diversification

The 3 months correlation between LAVVX and Vanguard is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of L Abbett i.e., L Abbett and Vanguard Intermediate go up and down completely randomly.

Pair Corralation between L Abbett and Vanguard Intermediate

Assuming the 90 days horizon L Abbett Fundamental is expected to generate 1.98 times more return on investment than Vanguard Intermediate. However, L Abbett is 1.98 times more volatile than Vanguard Intermediate Term Treasury. It trades about 0.08 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.01 per unit of risk. If you would invest  1,147  in L Abbett Fundamental on October 11, 2024 and sell it today you would earn a total of  405.00  from holding L Abbett Fundamental or generate 35.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

L Abbett Fundamental  vs.  Vanguard Intermediate Term Tre

L Abbett Fundamental

Risk-Adjusted Performance

1 of 100

Weak

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.

Vanguard Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Intermediate Term Treasury has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Intermediate 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 Vanguard Intermediate

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

The idea behind L Abbett Fundamental and Vanguard Intermediate Term Treasury 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.