Correlation Between Lord Abbett and Emerald Insights

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

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

Diversification Opportunities for Lord Abbett and Emerald Insights

0.78

Correlation Coefficient

Lord Abbett  Emerald Insights

Poor diversification

The 3 months correlation between Lord and Emerald is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett High and Emerald Insights Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Insights 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 High are associated (or correlated) with Emerald Insights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Insights has no effect on the direction of Lord Abbett i.e., Lord Abbett and Emerald Insights go up and down completely randomly.

Pair Corralation between Lord Abbett and Emerald Insights

Assuming the 90 days horizon Lord Abbett is expected to generate 6.68 times less return on investment than Emerald Insights. But when comparing it to its historical volatility, Lord Abbett High is 6.18 times less risky than Emerald Insights. It trades about 0.17 of its potential returns per unit of risk. Emerald Insights Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,898  in Emerald Insights Fund on September 5, 2024 and sell it today you would earn a total of  250.00  from holding Emerald Insights Fund or generate 13.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Lord Abbett High  vs.  Emerald Insights Fund

Lord Abbett High

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett High are ranked lower than 13 (%) 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.

Emerald Insights

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Insights Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Insights may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lord Abbett and Emerald Insights

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

The idea behind Lord Abbett High and Emerald Insights Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.