Correlation Between Lord Abbett and L Abbett

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

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

Diversification Opportunities for Lord Abbett and L Abbett

0.61

Correlation Coefficient

Lord Abbett  L Abbett

Poor diversification

The 3 months correlation between Lord and LGLUX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Focused 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 Lord 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 Lord Abbett Focused 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 Lord Abbett i.e., Lord Abbett and L Abbett go up and down completely randomly.

Pair Corralation between Lord Abbett and L Abbett

Assuming the 90 days horizon Lord Abbett Focused is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Focused is 1.24 times less risky than L Abbett. The mutual fund trades about -0.03 of its potential returns per unit of risk. The L Abbett Growth is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,136  in L Abbett Growth on December 10, 2024 and sell it today you would earn a total of  79.00  from holding L Abbett Growth or generate 1.91% return on investment over 90 days.

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

Lord Abbett Focused  vs.  L Abbett Growth

Lord Abbett Focused

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lord Abbett Focused 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

L Abbett Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days L Abbett Growth 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Lord Abbett and L Abbett

The main advantage of trading using opposite Lord Abbett and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett 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 Lord Abbett Focused 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.