Correlation Between Europac Gold and Lord Abbett

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

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

Diversification Opportunities for Europac Gold and Lord Abbett

-0.11

Correlation Coefficient

Europac Gold  Lord Abbett

Good diversification

The 3 months correlation between Europac and Lord is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Lord Abbett Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Global and Europac Gold 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 Europac Gold 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 Global has no effect on the direction of Europac Gold i.e., Europac Gold and Lord Abbett go up and down completely randomly.

Pair Corralation between Europac Gold and Lord Abbett

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Lord Abbett. In addition to that, Europac Gold is 3.24 times more volatile than Lord Abbett Global. It trades about -0.06 of its total potential returns per unit of risk. Lord Abbett Global is currently generating about 0.14 per unit of volatility. If you would invest  1,654  in Lord Abbett Global on September 13, 2024 and sell it today you would earn a total of  93.00  from holding Lord Abbett Global or generate 5.62% return on investment over 90 days.

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

Europac Gold Fund  vs.  Lord Abbett Global

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Lord Abbett Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Global are ranked lower than 10 (%) 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 Europac Gold and Lord Abbett

The main advantage of trading using opposite Europac Gold and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold 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 Europac Gold Fund and Lord Abbett Global 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.