Correlation Between L Abbett and Gabelli Equity

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

Diversification Opportunities for L Abbett and Gabelli Equity

0.86

Correlation Coefficient

L Abbett  Gabelli Equity

Very poor diversification

The 3 months correlation between LGLSX and Gabelli is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity 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 Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of L Abbett i.e., L Abbett and Gabelli Equity go up and down completely randomly.

Pair Corralation between L Abbett and Gabelli Equity

Assuming the 90 days horizon L Abbett Growth is expected to generate 1.71 times more return on investment than Gabelli Equity. However, L Abbett is 1.71 times more volatile than The Gabelli Equity. It trades about 0.25 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.13 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  773.00  from holding L Abbett Growth or generate 19.2% return on investment over 90 days.

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

L Abbett Growth  vs.  The Gabelli Equity

L Abbett Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 19 (%) 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.

Gabelli Equity

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Gabelli Equity 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 Gabelli Equity

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

The idea behind L Abbett Growth and The Gabelli Equity 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.