Correlation Between Gmo Global and Lord Abbett

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

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

Diversification Opportunities for Gmo Global and Lord Abbett

0.77

Correlation Coefficient

Gmo Global  Lord Abbett

Poor diversification

The 3 months correlation between Gmo and Lord is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Global Equity and Lord Abbett Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Inflation and Gmo Global 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 Gmo Global Equity 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 Inflation has no effect on the direction of Gmo Global i.e., Gmo Global and Lord Abbett go up and down completely randomly.

Pair Corralation between Gmo Global and Lord Abbett

Assuming the 90 days horizon Gmo Global Equity is expected to generate 3.95 times more return on investment than Lord Abbett. However, Gmo Global is 3.95 times more volatile than Lord Abbett Inflation. It trades about 0.03 of its potential returns per unit of risk. Lord Abbett Inflation is currently generating about 0.0 per unit of risk. If you would invest  3,036  in Gmo Global Equity on September 12, 2024 and sell it today you would earn a total of  9.00  from holding Gmo Global Equity or generate 0.3% return on investment over 90 days.

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

Gmo Global Equity  vs.  Lord Abbett Inflation

Gmo Global Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Inflation

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Inflation are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Gmo Global and Lord Abbett

The main advantage of trading using opposite Gmo Global and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Global 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 Gmo Global Equity and Lord Abbett Inflation 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.