Correlation Between L Abbett and Jpmorgan Dynamic

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

Diversification Opportunities for L Abbett and Jpmorgan Dynamic

0.97

Correlation Coefficient

L Abbett  Jpmorgan Dynamic

Almost no diversification

The 3 months correlation between LGLSX and Jpmorgan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Jpmorgan Dynamic Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Dynamic Small 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 Jpmorgan Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Dynamic Small has no effect on the direction of L Abbett i.e., L Abbett and Jpmorgan Dynamic go up and down completely randomly.

Pair Corralation between L Abbett and Jpmorgan Dynamic

Assuming the 90 days horizon L Abbett Growth is expected to under-perform the Jpmorgan Dynamic. In addition to that, L Abbett is 1.95 times more volatile than Jpmorgan Dynamic Small. It trades about -0.1 of its total potential returns per unit of risk. Jpmorgan Dynamic Small is currently generating about -0.11 per unit of volatility. If you would invest  3,303  in Jpmorgan Dynamic Small on December 29, 2024 and sell it today you would lose (256.00) from holding Jpmorgan Dynamic Small or give up 7.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

L Abbett Growth  vs.  Jpmorgan Dynamic Small

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 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.

Jpmorgan Dynamic Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jpmorgan Dynamic Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with L Abbett and Jpmorgan Dynamic

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

The idea behind L Abbett Growth and Jpmorgan Dynamic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.