Correlation Between Lord Abbett and Aggressive Growth

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

Diversification Opportunities for Lord Abbett and Aggressive Growth

0.58

Correlation Coefficient

Lord Abbett  Aggressive Growth

Very weak diversification

The 3 months correlation between Lord and Aggressive is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Aggressive Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Aggressive Growth go up and down completely randomly.

Pair Corralation between Lord Abbett and Aggressive Growth

Assuming the 90 days horizon Lord Abbett Small is expected to under-perform the Aggressive Growth. In addition to that, Lord Abbett is 1.48 times more volatile than Aggressive Growth Allocation. It trades about -0.12 of its total potential returns per unit of risk. Aggressive Growth Allocation is currently generating about -0.03 per unit of volatility. If you would invest  1,123  in Aggressive Growth Allocation on December 30, 2024 and sell it today you would lose (17.00) from holding Aggressive Growth Allocation or give up 1.51% of portfolio value over 90 days.

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

Lord Abbett Small  vs.  Aggressive Growth Allocation

Lord Abbett Small

Risk-Adjusted Performance

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 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.

Aggressive Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lord Abbett and Aggressive Growth

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

The idea behind Lord Abbett Small and Aggressive Growth Allocation 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.