Correlation Between Smallcap and Lord Abbett

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

By analyzing existing cross correlation between Smallcap Sp 600 and Lord Abbett Diversified, you can compare the effects of market volatilities on Smallcap 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 Smallcap with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap and Lord Abbett.

Diversification Opportunities for Smallcap and Lord Abbett

0.82

Correlation Coefficient

Smallcap  Lord Abbett

Very poor diversification

The 3 months correlation between Smallcap and Lord is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Sp 600 and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified and Smallcap 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 Smallcap Sp 600 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 Diversified has no effect on the direction of Smallcap i.e., Smallcap and Lord Abbett go up and down completely randomly.

Pair Corralation between Smallcap and Lord Abbett

Assuming the 90 days horizon Smallcap Sp 600 is expected to generate 4.04 times more return on investment than Lord Abbett. However, Smallcap is 4.04 times more volatile than Lord Abbett Diversified. It trades about 0.12 of its potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.27 per unit of risk. If you would invest  2,412  in Smallcap Sp 600 on May 17, 2025 and sell it today you would earn a total of  209.00  from holding Smallcap Sp 600 or generate 8.67% return on investment over 90 days.

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

Smallcap Sp 600  vs.  Lord Abbett Diversified

Smallcap Sp 600

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Smallcap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Lord Abbett Diversified

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Diversified are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smallcap and Lord Abbett

The main advantage of trading using opposite Smallcap and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap 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 Smallcap Sp 600 and Lord Abbett Diversified 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.