Correlation Between Franklin Equity and Lord Abbett

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Can any of the company-specific risk be diversified away by investing in both Franklin Equity 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 Franklin Equity and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Equity Income and Lord Abbett Multi Asset, you can compare the effects of market volatilities on Franklin Equity 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 Franklin Equity with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Equity and Lord Abbett.

Diversification Opportunities for Franklin Equity and Lord Abbett

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Franklin and Lord is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Equity Income and Lord Abbett Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Multi and Franklin Equity 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 Franklin Equity Income 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 Multi has no effect on the direction of Franklin Equity i.e., Franklin Equity and Lord Abbett go up and down completely randomly.

Pair Corralation between Franklin Equity and Lord Abbett

Assuming the 90 days horizon Franklin Equity Income is expected to under-perform the Lord Abbett. In addition to that, Franklin Equity is 2.86 times more volatile than Lord Abbett Multi Asset. It trades about -0.08 of its total potential returns per unit of risk. Lord Abbett Multi Asset is currently generating about 0.08 per unit of volatility. If you would invest  1,600  in Lord Abbett Multi Asset on October 24, 2024 and sell it today you would earn a total of  28.00  from holding Lord Abbett Multi Asset or generate 1.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Franklin Equity Income  vs.  Lord Abbett Multi Asset

 Performance 
       Timeline  
Franklin Equity Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Franklin Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Franklin Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Lord Abbett Multi 

Risk-Adjusted Performance

5 of 100

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

Franklin Equity and Lord Abbett Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Franklin Equity and Lord Abbett

The main advantage of trading using opposite Franklin Equity and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Equity 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 Franklin Equity Income and Lord Abbett Multi Asset 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.

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