Correlation Between L Abbett and Brandes International

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

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

Diversification Opportunities for L Abbett and Brandes International

-0.22

Correlation Coefficient

L Abbett  Brandes International

Very good diversification

The 3 months correlation between LGLSX and Brandes is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International 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 Growth are associated (or correlated) with Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of L Abbett i.e., L Abbett and Brandes International go up and down completely randomly.

Pair Corralation between L Abbett and Brandes International

Assuming the 90 days horizon L Abbett Growth is expected to generate 2.07 times more return on investment than Brandes International. However, L Abbett is 2.07 times more volatile than Brandes International Small. It trades about 0.28 of its potential returns per unit of risk. Brandes International Small is currently generating about 0.05 per unit of risk. If you would invest  4,027  in L Abbett Growth on September 13, 2024 and sell it today you would earn a total of  887.00  from holding L Abbett Growth or generate 22.03% return on investment over 90 days.

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

L Abbett Growth  vs.  Brandes International Small

L Abbett Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Brandes International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes International Small are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Brandes International 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 Brandes International

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

The idea behind L Abbett Growth and Brandes International Small 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.