Correlation Between Emerging Markets and Lord Abbett

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

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

Diversification Opportunities for Emerging Markets and Lord Abbett

0.26

Correlation Coefficient

Emerging Markets  Lord Abbett

Modest diversification

The 3 months correlation between Emerging and Lord is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Small and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short and Emerging Markets 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 Emerging Markets Small 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 Short has no effect on the direction of Emerging Markets i.e., Emerging Markets and Lord Abbett go up and down completely randomly.

Pair Corralation between Emerging Markets and Lord Abbett

Assuming the 90 days horizon Emerging Markets is expected to generate 24.86 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Emerging Markets Small is 15.63 times less risky than Lord Abbett. It trades about 0.18 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Lord Abbett Short on May 13, 2025 and sell it today you would earn a total of  33.00  from holding Lord Abbett Short or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Emerging Markets Small  vs.  Lord Abbett Short

Emerging Markets Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lord Abbett Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lord Abbett Short are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Lord Abbett is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Lord Abbett

The main advantage of trading using opposite Emerging Markets and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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 Emerging Markets Small and Lord Abbett Short 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.