Correlation Between Lord Abbett and Lebenthal Lisanti

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

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

Diversification Opportunities for Lord Abbett and Lebenthal Lisanti

0.93

Correlation Coefficient

Lord Abbett  Lebenthal Lisanti

Almost no diversification

The 3 months correlation between Lord and Lebenthal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Growth and Lebenthal Lisanti Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lebenthal Lisanti Small and Lord 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 Lord Abbett Growth are associated (or correlated) with Lebenthal Lisanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lebenthal Lisanti Small has no effect on the direction of Lord Abbett i.e., Lord Abbett and Lebenthal Lisanti go up and down completely randomly.

Pair Corralation between Lord Abbett and Lebenthal Lisanti

Assuming the 90 days horizon Lord Abbett Growth is expected to generate 0.91 times more return on investment than Lebenthal Lisanti. However, Lord Abbett Growth is 1.1 times less risky than Lebenthal Lisanti. It trades about 0.3 of its potential returns per unit of risk. Lebenthal Lisanti Small is currently generating about 0.21 per unit of risk. If you would invest  3,832  in Lord Abbett Growth on September 4, 2024 and sell it today you would earn a total of  954.00  from holding Lord Abbett Growth or generate 24.9% return on investment over 90 days.

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

Lord Abbett Growth  vs.  Lebenthal Lisanti Small

Lord Abbett Growth

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Growth are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Lebenthal Lisanti Small

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lebenthal Lisanti Small are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lebenthal Lisanti showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lord Abbett and Lebenthal Lisanti

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

The idea behind Lord Abbett Growth and Lebenthal Lisanti Small 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.