Correlation Between L Abbett and Auer Growth

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

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

Diversification Opportunities for L Abbett and Auer Growth

0.74

Correlation Coefficient

L Abbett  Auer Growth

Poor diversification

The 3 months correlation between LAVVX and Auer is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and L 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 L Abbett Fundamental are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of L Abbett i.e., L Abbett and Auer Growth go up and down completely randomly.

Pair Corralation between L Abbett and Auer Growth

Assuming the 90 days horizon L Abbett Fundamental is expected to under-perform the Auer Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, L Abbett Fundamental is 1.55 times less risky than Auer Growth. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Auer Growth Fund is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,757  in Auer Growth Fund on September 12, 2024 and sell it today you would lose (11.00) from holding Auer Growth Fund or give up 0.63% of portfolio value over 90 days.

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

L Abbett Fundamental  vs.  Auer Growth Fund

L Abbett Fundamental

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Fundamental are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Auer Growth Fund

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auer Growth Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Auer 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 L Abbett and Auer Growth

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

The idea behind L Abbett Fundamental and Auer Growth Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.