Correlation Between Lsv Small and Lord Abbett

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

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

Diversification Opportunities for Lsv Small and Lord Abbett

0.99

Correlation Coefficient

Lsv Small  Lord Abbett

No risk reduction

The 3 months correlation between Lsv and Lord is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lsv Small Cap and Lord Abbett Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Small and Lsv Small 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 Lsv Small Cap are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Small has no effect on the direction of Lsv Small i.e., Lsv Small and Lord Abbett go up and down completely randomly.

Pair Corralation between Lsv Small and Lord Abbett

Assuming the 90 days horizon Lsv Small is expected to generate 1.32 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Lsv Small Cap is 1.03 times less risky than Lord Abbett. It trades about 0.13 of its potential returns per unit of risk. Lord Abbett Small is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,168  in Lord Abbett Small on September 12, 2024 and sell it today you would earn a total of  280.00  from holding Lord Abbett Small or generate 12.92% return on investment over 90 days.

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

Lsv Small Cap  vs.  Lord Abbett Small

Lsv Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lsv Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lord Abbett Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Small are ranked lower than 13 (%) 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.

Pair Trading with Lsv Small and Lord Abbett

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

The idea behind Lsv Small Cap and Lord Abbett 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.