Correlation Between Gmo Small and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Gmo Small 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 Small 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 Small Cap and Lord Abbett Growth, you can compare the effects of market volatilities on Gmo Small 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 Small with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Small and Lord Abbett.
Diversification Opportunities for Gmo Small and Lord Abbett
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Lord is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Small Cap and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth and Gmo Small 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 Small Cap 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 Growth has no effect on the direction of Gmo Small i.e., Gmo Small and Lord Abbett go up and down completely randomly.
Pair Corralation between Gmo Small and Lord Abbett
Assuming the 90 days horizon Gmo Small is expected to generate 1.73 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Gmo Small Cap is 1.2 times less risky than Lord Abbett. It trades about 0.06 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,181 in Lord Abbett Growth on September 1, 2024 and sell it today you would earn a total of 536.00 from holding Lord Abbett Growth or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Gmo Small Cap vs. Lord Abbett Growth
Performance |
| Timeline |
| Gmo Small Cap |
| Lord Abbett Growth |
Gmo Small and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Small and Lord Abbett
The main advantage of trading using opposite Gmo Small and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Small 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.| Gmo Small vs. Gmo E Plus | Gmo Small vs. Gmo Trust | Gmo Small vs. Gmo Treasury Fund | Gmo Small vs. Gmo Emerging Markets |
| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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