Correlation Between Small Company and L Abbett
Can any of the company-specific risk be diversified away by investing in both Small Company 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 Small Company and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and L Abbett Growth, you can compare the effects of market volatilities on Small Company 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 Small Company with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and L Abbett.
Diversification Opportunities for Small Company and L Abbett
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small and LGLSX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Company 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 Small Pany Growth 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 Small Company i.e., Small Company and L Abbett go up and down completely randomly.
Pair Corralation between Small Company and L Abbett
Assuming the 90 days horizon Small Company is expected to generate 2.34 times less return on investment than L Abbett. In addition to that, Small Company is 1.04 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 4,225 in L Abbett Growth on March 27, 2025 and sell it today you would earn a total of 746.00 from holding L Abbett Growth or generate 17.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. L Abbett Growth
Performance |
| Timeline |
| Small Pany Growth |
| L Abbett Growth |
Small Company and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and L Abbett
The main advantage of trading using opposite Small Company and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| L Abbett vs. Dreyfus Large Cap | L Abbett vs. John Hancock Esg | L Abbett vs. Calvert Large Cap | L Abbett vs. Prudential Qma Large Cap |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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