Correlation Between L Abbett and Vanguard Long

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

Diversification Opportunities for L Abbett and Vanguard Long

-0.64

Correlation Coefficient

L Abbett  Vanguard Long

Excellent diversification

The 3 months correlation between LGLSX and Vanguard is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Vanguard Long Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term 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 Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of L Abbett i.e., L Abbett and Vanguard Long go up and down completely randomly.

Pair Corralation between L Abbett and Vanguard Long

Assuming the 90 days horizon L Abbett Growth is expected to generate 1.64 times more return on investment than Vanguard Long. However, L Abbett is 1.64 times more volatile than Vanguard Long Term Bond. It trades about 0.27 of its potential returns per unit of risk. Vanguard Long Term Bond is currently generating about -0.17 per unit of risk. If you would invest  4,019  in L Abbett Growth on September 16, 2024 and sell it today you would earn a total of  876.00  from holding L Abbett Growth or generate 21.8% return on investment over 90 days.

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

L Abbett Growth  vs.  Vanguard Long Term Bond

L Abbett Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 21 (%) 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.

Vanguard Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Long Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Vanguard Long

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

The idea behind L Abbett Growth and Vanguard Long Term Bond 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.