Correlation Between L Abbett and Gabelli Growth

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

Diversification Opportunities for L Abbett and Gabelli Growth

0.83

Correlation Coefficient

L Abbett  Gabelli Growth

Very poor diversification

The 3 months correlation between LGLSX and Gabelli is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of L Abbett i.e., L Abbett and Gabelli Growth go up and down completely randomly.

Pair Corralation between L Abbett and Gabelli Growth

Assuming the 90 days horizon L Abbett Growth is expected to generate 1.21 times more return on investment than Gabelli Growth. However, L Abbett is 1.21 times more volatile than The Gabelli Growth. It trades about -0.08 of its potential returns per unit of risk. The Gabelli Growth is currently generating about -0.12 per unit of risk. If you would invest  4,920  in L Abbett Growth on December 25, 2024 and sell it today you would lose (530.00) from holding L Abbett Growth or give up 10.77% of portfolio value 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 Growth

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gabelli Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli 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 L Abbett and Gabelli Growth

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

The idea behind L Abbett Growth and The Gabelli 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.