Correlation Between Lord Abbett and Guidemark(r) World

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

By analyzing existing cross correlation between Lord Abbett Diversified and Guidemark World Ex Us, you can compare the effects of market volatilities on Lord Abbett and Guidemark(r) World 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 Guidemark(r) World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Guidemark(r) World.

Diversification Opportunities for Lord Abbett and Guidemark(r) World

0.56

Correlation Coefficient

Lord Abbett  Guidemark(r) World

Very weak diversification

The 3 months correlation between Lord and Guidemark(r) is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Guidemark World Ex Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark World Ex 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 Diversified are associated (or correlated) with Guidemark(r) World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark World Ex has no effect on the direction of Lord Abbett i.e., Lord Abbett and Guidemark(r) World go up and down completely randomly.

Pair Corralation between Lord Abbett and Guidemark(r) World

Assuming the 90 days horizon Lord Abbett Diversified is expected to generate 0.46 times more return on investment than Guidemark(r) World. However, Lord Abbett Diversified is 2.18 times less risky than Guidemark(r) World. It trades about 0.09 of its potential returns per unit of risk. Guidemark World Ex Us is currently generating about 0.04 per unit of risk. If you would invest  1,390  in Lord Abbett Diversified on October 24, 2024 and sell it today you would earn a total of  243.00  from holding Lord Abbett Diversified or generate 17.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Lord Abbett Diversified  vs.  Guidemark World Ex Us

Lord Abbett Diversified

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Diversified are ranked lower than 5 (%) 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.

Guidemark World Ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark World Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidemark(r) World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lord Abbett and Guidemark(r) World

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

The idea behind Lord Abbett Diversified and Guidemark World Ex Us 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..