Correlation Between L Abbett and International Equity

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

Diversification Opportunities for L Abbett and International Equity

-0.47

Correlation Coefficient

L Abbett  International Equity

Very good diversification

The 3 months correlation between LGLSX and International is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and International Equity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of L Abbett i.e., L Abbett and International Equity go up and down completely randomly.

Pair Corralation between L Abbett and International Equity

Assuming the 90 days horizon L Abbett Growth is expected to under-perform the International Equity. In addition to that, L Abbett is 2.35 times more volatile than International Equity Portfolio. It trades about -0.1 of its total potential returns per unit of risk. International Equity Portfolio is currently generating about 0.13 per unit of volatility. If you would invest  974.00  in International Equity Portfolio on December 30, 2024 and sell it today you would earn a total of  69.00  from holding International Equity Portfolio or generate 7.08% 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.  International Equity Portfolio

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.

International Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Equity Portfolio are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, International Equity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with L Abbett and International Equity

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

The idea behind L Abbett Growth and International Equity Portfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.