Correlation Between Blackrock Lifepath and L Abbett

Can any of the company-specific risk be diversified away by investing in both Blackrock Lifepath and L Abbett 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 Blackrock Lifepath and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Lifepath Dynamic and L Abbett Fundamental, you can compare the effects of market volatilities on Blackrock Lifepath and L Abbett 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 Blackrock Lifepath with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Lifepath and L Abbett.

Diversification Opportunities for Blackrock Lifepath and L Abbett

0.5

Correlation Coefficient

Blackrock Lifepath  L Abbett

Very weak diversification

The 3 months correlation between BLACKROCK and LAVVX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Dynamic and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental and Blackrock Lifepath 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 Blackrock Lifepath Dynamic are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Fundamental has no effect on the direction of Blackrock Lifepath i.e., Blackrock Lifepath and L Abbett go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and L Abbett

Assuming the 90 days horizon Blackrock Lifepath is expected to generate 1.69 times less return on investment than L Abbett. But when comparing it to its historical volatility, Blackrock Lifepath Dynamic is 1.35 times less risky than L Abbett. It trades about 0.07 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,175  in L Abbett Fundamental on October 26, 2024 and sell it today you would earn a total of  455.00  from holding L Abbett Fundamental or generate 38.72% return on investment over 90 days.

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

Blackrock Lifepath Dynamic  vs.  L Abbett Fundamental

Blackrock Lifepath

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Lifepath Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Blackrock Lifepath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

L Abbett Fundamental

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blackrock Lifepath and L Abbett

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

The idea behind Blackrock Lifepath Dynamic and L Abbett Fundamental 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.