Correlation Between Lord Abbett and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Franklin Lifesmart 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 Lord Abbett and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Vertible and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Lord Abbett and Franklin Lifesmart 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 Lord Abbett with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Franklin Lifesmart.
Diversification Opportunities for Lord Abbett and Franklin Lifesmart
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LORD and Franklin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Vertible and Franklin Lifesmart 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2050 and Lord 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 Lord Abbett Vertible are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2050 has no effect on the direction of Lord Abbett i.e., Lord Abbett and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Lord Abbett and Franklin Lifesmart
Assuming the 90 days horizon Lord Abbett Vertible is expected to generate 0.97 times more return on investment than Franklin Lifesmart. However, Lord Abbett Vertible is 1.03 times less risky than Franklin Lifesmart. It trades about 0.47 of its potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.06 per unit of risk. If you would invest 1,382 in Lord Abbett Vertible on August 28, 2024 and sell it today you would earn a total of 86.00 from holding Lord Abbett Vertible or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Vertible vs. Franklin Lifesmart 2050
Performance |
| Timeline |
| Lord Abbett Vertible |
| Franklin Lifesmart 2050 |
Lord Abbett and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Franklin Lifesmart
The main advantage of trading using opposite Lord Abbett and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund | Lord Abbett vs. Floating Rate Fund | Lord Abbett vs. Lord Abbett Inv |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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