Correlation Between L Abbett and Lifestyle

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

Diversification Opportunities for L Abbett and Lifestyle

0.65

Correlation Coefficient

L Abbett  Lifestyle

Poor diversification

The 3 months correlation between LGLSX and Lifestyle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Lifestyle Ii Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii 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 Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Growth has no effect on the direction of L Abbett i.e., L Abbett and Lifestyle go up and down completely randomly.

Pair Corralation between L Abbett and Lifestyle

Assuming the 90 days horizon L Abbett Growth is expected to under-perform the Lifestyle. In addition to that, L Abbett is 3.02 times more volatile than Lifestyle Ii Growth. It trades about -0.1 of its total potential returns per unit of risk. Lifestyle Ii Growth is currently generating about 0.01 per unit of volatility. If you would invest  1,275  in Lifestyle Ii Growth on December 21, 2024 and sell it today you would earn a total of  3.00  from holding Lifestyle Ii Growth or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

L Abbett Growth  vs.  Lifestyle Ii 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 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.

Lifestyle Ii Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifestyle Ii Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lifestyle 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 Lifestyle

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

The idea behind L Abbett Growth and Lifestyle Ii 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.