Correlation Between Vanguard Explorer and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer 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 Vanguard Explorer and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Lord Abbett Alpha, you can compare the effects of market volatilities on Vanguard Explorer 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 Vanguard Explorer with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Lord Abbett.
Diversification Opportunities for Vanguard Explorer and Lord Abbett
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Lord is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund and Lord Abbett Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Alpha and Vanguard Explorer 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 Vanguard Explorer Fund 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 Alpha has no effect on the direction of Vanguard Explorer i.e., Vanguard Explorer and Lord Abbett go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Lord Abbett
Assuming the 90 days horizon Vanguard Explorer Fund is expected to under-perform the Lord Abbett. In addition to that, Vanguard Explorer is 1.07 times more volatile than Lord Abbett Alpha. It trades about -0.15 of its total potential returns per unit of risk. Lord Abbett Alpha is currently generating about -0.16 per unit of volatility. If you would invest 2,545 in Lord Abbett Alpha on January 25, 2024 and sell it today you would lose (85.00) from holding Lord Abbett Alpha or give up 3.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Explorer Fund vs. Lord Abbett Alpha
Performance |
Timeline |
Vanguard Explorer |
Lord Abbett Alpha |
Vanguard Explorer and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Explorer and Lord Abbett
The main advantage of trading using opposite Vanguard Explorer and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer 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.Vanguard Explorer vs. Champlain Mid Cap | Vanguard Explorer vs. Aberdeen Select International | Vanguard Explorer vs. Marsico 21st Century | Vanguard Explorer vs. Diamond Hill Large |
Lord Abbett vs. Fidelity Advisor Health | Lord Abbett vs. HUMANA INC | Lord Abbett vs. Aquagold International | Lord Abbett vs. Morningstar Unconstrained Allocation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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