Correlation Between Lord Abbett and Alger Midcap

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

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

Diversification Opportunities for Lord Abbett and Alger Midcap

0.96

Correlation Coefficient

Lord Abbett  Alger Midcap

Almost no diversification

The 3 months correlation between Lord and Alger is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Growth and Alger Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Midcap 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 Growth are associated (or correlated) with Alger Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Midcap Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Alger Midcap go up and down completely randomly.

Pair Corralation between Lord Abbett and Alger Midcap

Assuming the 90 days horizon Lord Abbett Growth is expected to generate 1.33 times more return on investment than Alger Midcap. However, Lord Abbett is 1.33 times more volatile than Alger Midcap Growth. It trades about 0.13 of its potential returns per unit of risk. Alger Midcap Growth is currently generating about 0.09 per unit of risk. If you would invest  3,181  in Lord Abbett Growth on September 27, 2024 and sell it today you would earn a total of  1,746  from holding Lord Abbett Growth or generate 54.89% return on investment over 90 days.

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

Lord Abbett Growth  vs.  Alger Midcap Growth

Lord Abbett Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Alger Midcap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Midcap Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lord Abbett and Alger Midcap

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

The idea behind Lord Abbett Growth and Alger Midcap 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.