Correlation Between Sprott Gold and L Abbett

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

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

Diversification Opportunities for Sprott Gold and L Abbett

-0.54

Correlation Coefficient

Sprott Gold  L Abbett

Excellent diversification

The 3 months correlation between Sprott and LGLSX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth and Sprott Gold 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 Sprott Gold Equity 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 Growth has no effect on the direction of Sprott Gold i.e., Sprott Gold and L Abbett go up and down completely randomly.

Pair Corralation between Sprott Gold and L Abbett

Assuming the 90 days horizon Sprott Gold is expected to generate 1.9 times less return on investment than L Abbett. In addition to that, Sprott Gold is 1.2 times more volatile than L Abbett Growth. It trades about 0.05 of its total potential returns per unit of risk. L Abbett Growth is currently generating about 0.12 per unit of volatility. If you would invest  3,148  in L Abbett Growth on September 23, 2024 and sell it today you would earn a total of  1,679  from holding L Abbett Growth or generate 53.34% return on investment over 90 days.

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

Sprott Gold Equity  vs.  L Abbett Growth

Sprott Gold Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Gold Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest sluggish performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

L Abbett Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 15 (%) 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.

Pair Trading with Sprott Gold and L Abbett

The main advantage of trading using opposite Sprott Gold and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold 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 Sprott Gold Equity and L Abbett Growth 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.