Correlation Between L Abbett and Columbia Corporate

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

Diversification Opportunities for L Abbett and Columbia Corporate

-0.42

Correlation Coefficient

L Abbett  Columbia Corporate

Very good diversification

The 3 months correlation between LGLSX and Columbia is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Columbia Porate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Porate Income 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 Columbia Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Porate Income has no effect on the direction of L Abbett i.e., L Abbett and Columbia Corporate go up and down completely randomly.

Pair Corralation between L Abbett and Columbia Corporate

Assuming the 90 days horizon L Abbett Growth is expected to generate 4.2 times more return on investment than Columbia Corporate. However, L Abbett is 4.2 times more volatile than Columbia Porate Income. It trades about 0.16 of its potential returns per unit of risk. Columbia Porate Income is currently generating about -0.15 per unit of risk. If you would invest  4,291  in L Abbett Growth on October 10, 2024 and sell it today you would earn a total of  584.00  from holding L Abbett Growth or generate 13.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

L Abbett Growth  vs.  Columbia Porate Income

L Abbett Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 12 (%) 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.

Columbia Porate Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Porate Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Corporate 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 Columbia Corporate

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

The idea behind L Abbett Growth and Columbia Porate Income 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.