Correlation Between Gmo Emerging and Lord Abbett

Can any of the company-specific risk be diversified away by investing in both Gmo 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 Gmo 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 Gmo Emerging Markets and Lord Abbett Short, you can compare the effects of market volatilities on Gmo 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 Gmo Emerging with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Lord Abbett.

Diversification Opportunities for Gmo Emerging and Lord Abbett

-0.18

Correlation Coefficient

Gmo Emerging  Lord Abbett

Good diversification

The 3 months correlation between Gmo and Lord is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Markets and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Gmo 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 Gmo 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 Short has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Lord Abbett go up and down completely randomly.

Pair Corralation between Gmo Emerging and Lord Abbett

Assuming the 90 days horizon Gmo Emerging Markets is expected to under-perform the Lord Abbett. In addition to that, Gmo Emerging is 3.87 times more volatile than Lord Abbett Short. It trades about -0.56 of its total potential returns per unit of risk. Lord Abbett Short is currently generating about -0.35 per unit of volatility. If you would invest  999.00  in Lord Abbett Short on October 12, 2024 and sell it today you would lose (12.00) from holding Lord Abbett Short or give up 1.2% of portfolio value over 90 days.

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

Gmo Emerging Markets  vs.  Lord Abbett Short

Gmo Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Short

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 1 (%) 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 Gmo Emerging and Lord Abbett

The main advantage of trading using opposite Gmo Emerging and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo 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 Gmo Emerging Markets and Lord Abbett Short 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.