Correlation Between L Abbett and Franklin High
Can any of the company-specific risk be diversified away by investing in both L Abbett and Franklin High 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 L Abbett and Franklin High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Abbett Fundamental and Franklin High Income, you can compare the effects of market volatilities on L Abbett and Franklin High 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 L Abbett with a short position of Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Franklin High.
Diversification Opportunities for L Abbett and Franklin High
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAVVX and Franklin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Fundamental and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income and L Abbett 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 L Abbett Fundamental are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of L Abbett i.e., L Abbett and Franklin High go up and down completely randomly.
Pair Corralation between L Abbett and Franklin High
Assuming the 90 days horizon L Abbett Fundamental is expected to generate 4.04 times more return on investment than Franklin High. However, L Abbett is 4.04 times more volatile than Franklin High Income. It trades about 0.06 of its potential returns per unit of risk. Franklin High Income is currently generating about 0.16 per unit of risk. If you would invest 1,511 in L Abbett Fundamental on August 29, 2024 and sell it today you would earn a total of 106.00 from holding L Abbett Fundamental or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Fundamental vs. Franklin High Income
Performance |
| Timeline |
| L Abbett Fundamental |
| Franklin High Income |
L Abbett and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Franklin High
The main advantage of trading using opposite L Abbett and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Franklin High 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 Franklin High will offset losses from the drop in Franklin High's long position.| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate Fund |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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