Correlation Between Franklin Emerging and L Abbett
Can any of the company-specific risk be diversified away by investing in both Franklin Emerging 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 Emerging 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 Emerging Market and L Abbett Growth, you can compare the effects of market volatilities on Franklin Emerging 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 Emerging with a short position of L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Emerging and L Abbett.
Diversification Opportunities for Franklin Emerging and L Abbett
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and LGLSX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Emerging Market 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 Emerging 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 Emerging Market 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 Emerging i.e., Franklin Emerging and L Abbett go up and down completely randomly.
Pair Corralation between Franklin Emerging and L Abbett
Assuming the 90 days horizon Franklin Emerging is expected to generate 3.84 times less return on investment than L Abbett. But when comparing it to its historical volatility, Franklin Emerging Market is 7.09 times less risky than L Abbett. It trades about 0.17 of its potential returns per unit of risk. L Abbett Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,528 in L Abbett Growth on November 6, 2024 and sell it today you would earn a total of 387.00 from holding L Abbett Growth or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Emerging Market vs. L Abbett Growth
Performance |
| Timeline |
| Franklin Emerging Market |
| L Abbett Growth |
Franklin Emerging and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Emerging and L Abbett
The main advantage of trading using opposite Franklin Emerging and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Emerging 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 Emerging vs. Hsbc Treasury Money | Franklin Emerging vs. Dws Government Money | Franklin Emerging vs. Aig Government Money | Franklin Emerging vs. Franklin Government Money |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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