Correlation Between William Blair and L Abbett

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

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

Diversification Opportunities for William Blair and L Abbett

-0.54

Correlation Coefficient

William Blair  L Abbett

Excellent diversification

The 3 months correlation between William and LGLSX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Institutional 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 William Blair 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 William Blair Institutional 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 William Blair i.e., William Blair and L Abbett go up and down completely randomly.

Pair Corralation between William Blair and L Abbett

Assuming the 90 days horizon William Blair Institutional is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, William Blair Institutional is 1.01 times less risky than L Abbett. The mutual fund trades about -0.35 of its potential returns per unit of risk. The L Abbett Growth is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  4,982  in L Abbett Growth on October 7, 2024 and sell it today you would lose (107.00) from holding L Abbett Growth or give up 2.15% of portfolio value over 90 days.

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

William Blair Institutional  vs.  L Abbett Growth

William Blair Instit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days William Blair Institutional 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.

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 William Blair and L Abbett

The main advantage of trading using opposite William Blair and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Institutional 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.