Correlation Between Franklin Federal and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Franklin Federal 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 Federal 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 Federal Limited Term and Lord Abbett Growth, you can compare the effects of market volatilities on Franklin Federal 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 Federal with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Lord Abbett.
Diversification Opportunities for Franklin Federal and Lord Abbett
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Lord is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Limited Term and Lord Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Growth and Franklin Federal 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 Federal Limited Term 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 Growth has no effect on the direction of Franklin Federal i.e., Franklin Federal and Lord Abbett go up and down completely randomly.
Pair Corralation between Franklin Federal and Lord Abbett
Assuming the 90 days horizon Franklin Federal is expected to generate 6.15 times less return on investment than Lord Abbett. But when comparing it to its historical volatility, Franklin Federal Limited Term is 12.78 times less risky than Lord Abbett. It trades about 0.19 of its potential returns per unit of risk. Lord Abbett Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,624 in Lord Abbett Growth on September 12, 2024 and sell it today you would earn a total of 738.00 from holding Lord Abbett Growth or generate 45.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Limited Term vs. Lord Abbett Growth
Performance |
| Timeline |
| Franklin Federal Lim |
| Lord Abbett Growth |
Franklin Federal and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Lord Abbett
The main advantage of trading using opposite Franklin Federal and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal 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 Federal vs. Vanguard Limited Term Tax Exempt | Franklin Federal vs. SCOR PK | Franklin Federal vs. Morningstar Unconstrained Allocation | Franklin Federal vs. Via Renewables |
| Lord Abbett vs. Angel Oak Ultrashort | Lord Abbett vs. Dreyfus Short Intermediate | Lord Abbett vs. Franklin Federal Limited Term | Lord Abbett vs. Rbc Short Duration |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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