Correlation Between Franklin Mutual and L Abbett
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual and L 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 Mutual and L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Shares and L Abbett Growth, you can compare the effects of market volatilities on Franklin Mutual and L 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 Mutual with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and L Abbett.
Diversification Opportunities for Franklin Mutual and L Abbett
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and LGLSX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Shares and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth and Franklin Mutual 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 Mutual Shares are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of Franklin Mutual i.e., Franklin Mutual and L Abbett go up and down completely randomly.
Pair Corralation between Franklin Mutual and L Abbett
Assuming the 90 days horizon Franklin Mutual Shares is expected to generate 0.35 times more return on investment than L Abbett. However, Franklin Mutual Shares is 2.84 times less risky than L Abbett. It trades about 0.05 of its potential returns per unit of risk. L Abbett Growth is currently generating about -0.1 per unit of risk. If you would invest 2,476 in Franklin Mutual Shares on December 29, 2024 and sell it today you would earn a total of 49.00 from holding Franklin Mutual Shares or generate 1.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Mutual Shares vs. L Abbett Growth
Performance |
Timeline |
Franklin Mutual Shares |
L Abbett Growth |
Franklin Mutual and L Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Mutual and L Abbett
The main advantage of trading using opposite Franklin Mutual and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual position performs unexpectedly, L 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 L Abbett will offset losses from the drop in L Abbett's long position.Franklin Mutual vs. Ab Bond Inflation | Franklin Mutual vs. Intermediate Term Bond Fund | Franklin Mutual vs. Intermediate Bond Fund | Franklin Mutual vs. Federated Municipal Ultrashort |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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