Correlation Between Lord Abbett and Goldman Sachs

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

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

Diversification Opportunities for Lord Abbett and Goldman Sachs

0.96

Correlation Coefficient

Lord Abbett  Goldman Sachs

Almost no diversification

The 3 months correlation between Lord and Goldman is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and Lord Abbett 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 Lord Abbett Small are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Goldman Sachs go up and down completely randomly.

Pair Corralation between Lord Abbett and Goldman Sachs

Assuming the 90 days horizon Lord Abbett is expected to generate 1.87 times less return on investment than Goldman Sachs. In addition to that, Lord Abbett is 1.19 times more volatile than Goldman Sachs Growth. It trades about 0.13 of its total potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.29 per unit of volatility. If you would invest  1,977  in Goldman Sachs Growth on September 13, 2024 and sell it today you would earn a total of  397.00  from holding Goldman Sachs Growth or generate 20.08% return on investment over 90 days.

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

Lord Abbett Small  vs.  Goldman Sachs Growth

Lord Abbett Small

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lord Abbett may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Growth

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Growth are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lord Abbett and Goldman Sachs

The main advantage of trading using opposite Lord Abbett and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.

The idea behind Lord Abbett Small and Goldman Sachs Growth 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.