Correlation Between Lord Abbett and Baron Growth

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

By analyzing existing cross correlation between Lord Abbett Small and Baron Growth Fund, you can compare the effects of market volatilities on Lord Abbett and Baron Growth 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 Lord Abbett with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Baron Growth.

Diversification Opportunities for Lord Abbett and Baron Growth

0.91

Correlation Coefficient

Lord Abbett  Baron Growth

Almost no diversification

The 3 months correlation between Lord and Baron is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Lord 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 Lord Abbett Small are associated (or correlated) with Baron Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Baron Growth go up and down completely randomly.

Pair Corralation between Lord Abbett and Baron Growth

If you would invest  1,866  in Lord Abbett Small on October 27, 2024 and sell it today you would earn a total of  320.00  from holding Lord Abbett Small or generate 17.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	0.0%
Values	Daily Returns

Lord Abbett Small  vs.  Baron Growth Fund

Lord Abbett Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baron Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Lord Abbett and Baron Growth

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

The idea behind Lord Abbett Small and Baron Growth Fund 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 Global Correlations module to find global opportunities by holding instruments from different markets.