Correlation Between Pgim Jennison and L Abbett

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

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

Diversification Opportunities for Pgim Jennison and L Abbett

0.92

Correlation Coefficient

Pgim Jennison  L Abbett

Almost no diversification

The 3 months correlation between Pgim and LGLSX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pgim Jennison Technology 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 Pgim Jennison 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 Pgim Jennison Technology 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 Pgim Jennison i.e., Pgim Jennison and L Abbett go up and down completely randomly.

Pair Corralation between Pgim Jennison and L Abbett

Assuming the 90 days horizon Pgim Jennison is expected to generate 1.05 times less return on investment than L Abbett. In addition to that, Pgim Jennison is 1.18 times more volatile than L Abbett Growth. It trades about 0.08 of its total potential returns per unit of risk. L Abbett Growth is currently generating about 0.1 per unit of volatility. If you would invest  3,065  in L Abbett Growth on September 12, 2024 and sell it today you would earn a total of  1,799  from holding L Abbett Growth or generate 58.69% return on investment over 90 days.

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

Pgim Jennison Technology  vs.  L Abbett Growth

Pgim Jennison Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Jennison Technology are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pgim Jennison may actually be approaching a critical reversion point that can send shares even higher in January 2025.

L Abbett Growth

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in L Abbett Growth are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, L Abbett showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pgim Jennison and L Abbett

The main advantage of trading using opposite Pgim Jennison and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pgim Jennison 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.

The idea behind Pgim Jennison Technology and L Abbett Growth 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.