Correlation Between Scharf Global and L Abbett
Can any of the company-specific risk be diversified away by investing in both Scharf Global 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 Scharf Global and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scharf Global Opportunity and L Abbett Growth, you can compare the effects of market volatilities on Scharf Global 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 Scharf Global with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and L Abbett.
Diversification Opportunities for Scharf Global and L Abbett
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scharf and LGLSX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity 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 Scharf Global 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 Scharf Global Opportunity 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 Scharf Global i.e., Scharf Global and L Abbett go up and down completely randomly.
Pair Corralation between Scharf Global and L Abbett
Assuming the 90 days horizon Scharf Global Opportunity is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Scharf Global Opportunity is 1.2 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 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,732 in L Abbett Growth on September 20, 2024 and sell it today you would earn a total of 197.00 from holding L Abbett Growth or generate 4.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Scharf Global Opportunity vs. L Abbett Growth
Performance |
Timeline |
Scharf Global Opportunity |
L Abbett Growth |
Scharf Global and L Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scharf Global and L Abbett
The main advantage of trading using opposite Scharf Global and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global 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.Scharf Global vs. Transamerica Intermediate Muni | Scharf Global vs. Ab Impact Municipal | Scharf Global vs. Pace Municipal Fixed | Scharf Global vs. California High Yield Municipal |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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