Correlation Between Lord Abbett and Franklin California
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Franklin California 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 California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Emerging and Franklin California High, you can compare the effects of market volatilities on Lord Abbett and Franklin California 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 California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Franklin California.
Diversification Opportunities for Lord Abbett and Franklin California
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Franklin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Emerging and Franklin California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California High 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 Emerging are associated (or correlated) with Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California High has no effect on the direction of Lord Abbett i.e., Lord Abbett and Franklin California go up and down completely randomly.
Pair Corralation between Lord Abbett and Franklin California
Assuming the 90 days horizon Lord Abbett Emerging is expected to generate 1.24 times more return on investment than Franklin California. However, Lord Abbett is 1.24 times more volatile than Franklin California High. It trades about 0.14 of its potential returns per unit of risk. Franklin California High is currently generating about 0.11 per unit of risk. If you would invest 364.00 in Lord Abbett Emerging on September 12, 2024 and sell it today you would earn a total of 66.00 from holding Lord Abbett Emerging or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Emerging vs. Franklin California High
Performance |
| Timeline |
| Lord Abbett Emerging |
| Franklin California High |
Lord Abbett and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Franklin California
The main advantage of trading using opposite Lord Abbett and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Franklin California 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 California will offset losses from the drop in Franklin California's long position.| Lord Abbett vs. 1919 Financial Services | Lord Abbett vs. Vanguard Financials Index | Lord Abbett vs. Goldman Sachs Financial | Lord Abbett vs. Fidelity Advisor Financial |
| Franklin California vs. Alliancebernstein National Municipal | Franklin California vs. Versatile Bond Portfolio | Franklin California vs. T Rowe Price | Franklin California vs. The National Tax Free |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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