Correlation Between Lord Abbett and Avantis Large

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

By analyzing existing cross correlation between Lord Abbett Inflation and Avantis Large Cap, you can compare the effects of market volatilities on Lord Abbett and Avantis Large 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 Avantis Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Avantis Large.

Diversification Opportunities for Lord Abbett and Avantis Large

0.01

Correlation Coefficient

Lord Abbett  Avantis Large

Significant diversification

The 3 months correlation between Lord and Avantis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Inflation and Avantis Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Large Cap 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 Inflation are associated (or correlated) with Avantis Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Large Cap has no effect on the direction of Lord Abbett i.e., Lord Abbett and Avantis Large go up and down completely randomly.

Pair Corralation between Lord Abbett and Avantis Large

Assuming the 90 days horizon Lord Abbett Inflation is expected to under-perform the Avantis Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lord Abbett Inflation is 5.48 times less risky than Avantis Large. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Avantis Large Cap is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Avantis Large Cap on September 23, 2024 and sell it today you would earn a total of  6.00  from holding Avantis Large Cap or generate 0.42% return on investment over 90 days.

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

Lord Abbett Inflation  vs.  Avantis Large Cap

Lord Abbett Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Avantis Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Avantis Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lord Abbett and Avantis Large

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

The idea behind Lord Abbett Inflation and Avantis Large Cap 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 Stocks Directory module to find actively traded stocks across global markets.