Correlation Between The Emerging and Lord Abbett

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

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

Diversification Opportunities for The Emerging and Lord Abbett

0.99

Correlation Coefficient

The Emerging  Lord Abbett

No risk reduction

The 3 months correlation between The and Lord is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Lord Abbett Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Trust and The Emerging 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 The Emerging Markets 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 Trust has no effect on the direction of The Emerging i.e., The Emerging and Lord Abbett go up and down completely randomly.

Pair Corralation between The Emerging and Lord Abbett

Assuming the 90 days horizon The Emerging Markets is expected to under-perform the Lord Abbett. In addition to that, The Emerging is 1.06 times more volatile than Lord Abbett Trust. It trades about -0.2 of its total potential returns per unit of risk. Lord Abbett Trust is currently generating about -0.14 per unit of volatility. If you would invest  1,620  in Lord Abbett Trust on September 4, 2024 and sell it today you would lose (41.00) from holding Lord Abbett Trust or give up 2.53% of portfolio value over 90 days.

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

The Emerging Markets  vs.  Lord Abbett Trust

Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, The Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Trust are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong 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 The Emerging and Lord Abbett

The main advantage of trading using opposite The Emerging and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging 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 The Emerging Markets and Lord Abbett Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.