Correlation Between L Abbett and Champlain Mid

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

Diversification Opportunities for L Abbett and Champlain Mid

0.94

Correlation Coefficient

L Abbett  Champlain Mid

Almost no diversification

The 3 months correlation between LGLSX and Champlain is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Champlain Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Mid Cap 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 Champlain Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Mid Cap has no effect on the direction of L Abbett i.e., L Abbett and Champlain Mid go up and down completely randomly.

Pair Corralation between L Abbett and Champlain Mid

Assuming the 90 days horizon L Abbett Growth is expected to generate 1.38 times more return on investment than Champlain Mid. However, L Abbett is 1.38 times more volatile than Champlain Mid Cap. It trades about 0.26 of its potential returns per unit of risk. Champlain Mid Cap is currently generating about 0.2 per unit of risk. If you would invest  3,996  in L Abbett Growth on September 12, 2024 and sell it today you would earn a total of  804.00  from holding L Abbett Growth or generate 20.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

L Abbett Growth  vs.  Champlain Mid Cap

L Abbett Growth

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 20 (%) 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.

Champlain Mid Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Champlain Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with L Abbett and Champlain Mid

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

The idea behind L Abbett Growth and Champlain Mid Cap 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.