Correlation Between Vanguard Emerging and Lord Abbett

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

Diversification Opportunities for Vanguard Emerging and Lord Abbett

0.67

Correlation Coefficient

Vanguard Emerging  Lord Abbett

Poor diversification

The 3 months correlation between Vanguard and Lord is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Emerging Markets and Lord Abbett Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Emerging and Vanguard 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 Vanguard 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 Emerging has no effect on the direction of Vanguard Emerging i.e., Vanguard Emerging and Lord Abbett go up and down completely randomly.

Pair Corralation between Vanguard Emerging and Lord Abbett

Assuming the 90 days horizon Vanguard Emerging Markets is expected to under-perform the Lord Abbett. In addition to that, Vanguard Emerging is 1.02 times more volatile than Lord Abbett Emerging. It trades about -0.28 of its total potential returns per unit of risk. Lord Abbett Emerging is currently generating about -0.23 per unit of volatility. If you would invest  1,614  in Lord Abbett Emerging on October 6, 2024 and sell it today you would lose (58.00) from holding Lord Abbett Emerging or give up 3.59% of portfolio value over 90 days.

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

Vanguard Emerging Markets  vs.  Lord Abbett Emerging

Vanguard Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lord Abbett Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential 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 Vanguard Emerging and Lord Abbett

The main advantage of trading using opposite Vanguard Emerging and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 Vanguard Emerging Markets and Lord Abbett Emerging 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.