Correlation Between Lord Abbett and Emerging Markets

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

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

Diversification Opportunities for Lord Abbett and Emerging Markets

-0.77

Correlation Coefficient

Lord Abbett  Emerging Markets

Pay attention - limited upside

The 3 months correlation between Lord and Emerging is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Investment and Emerging Markets Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Investment are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Growth has no effect on the direction of Lord Abbett i.e., Lord Abbett and Emerging Markets go up and down completely randomly.

Pair Corralation between Lord Abbett and Emerging Markets

Assuming the 90 days horizon Lord Abbett Investment is not expected to generate positive returns. However, Lord Abbett Investment is 13.0 times less risky than Emerging Markets. It waists most of its returns potential to compensate for thr risk taken. Emerging Markets is generating about -0.13 per unit of risk. If you would invest  1,026  in Lord Abbett Investment on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Lord Abbett Investment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Lord Abbett Investment  vs.  Emerging Markets Growth

Lord Abbett Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Investment are ranked lower than 9 (%) 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.

Emerging Markets Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Growth 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.

Pair Trading with Lord Abbett and Emerging Markets

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

The idea behind Lord Abbett Investment and Emerging Markets 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.