Correlation Between Franklin Equity and Lord Abbett
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Equity Income vs. Lord Abbett Multi Asset
Performance |
Timeline |
Franklin Equity Income |
Lord Abbett Multi |
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.Franklin Equity vs. Moderate Balanced Allocation | Franklin Equity vs. College Retirement Equities | Franklin Equity vs. Voya Target Retirement | Franklin Equity vs. Tiaa Cref Lifestyle Moderate |
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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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