Correlation Between L Abbett and Franklin Small
Can any of the company-specific risk be diversified away by investing in both L Abbett and Franklin Small 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 Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Abbett Growth and Franklin Small Cap, you can compare the effects of market volatilities on L Abbett and Franklin Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Abbett and Franklin Small.
Diversification Opportunities for L Abbett and Franklin Small
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGLSX and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding L Abbett Growth and Franklin Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Cap 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 Growth are associated (or correlated) with Franklin Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Cap has no effect on the direction of L Abbett i.e., L Abbett and Franklin Small go up and down completely randomly.
Pair Corralation between L Abbett and Franklin Small
Assuming the 90 days horizon L Abbett is expected to generate 4.33 times less return on investment than Franklin Small. In addition to that, L Abbett is 1.56 times more volatile than Franklin Small Cap. It trades about 0.03 of its total potential returns per unit of risk. Franklin Small Cap is currently generating about 0.21 per unit of volatility. If you would invest 1,595 in Franklin Small Cap on October 23, 2024 and sell it today you would earn a total of 56.00 from holding Franklin Small Cap or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
L Abbett Growth vs. Franklin Small Cap
Performance |
| Timeline |
| L Abbett Growth |
| Franklin Small Cap |
L Abbett and Franklin Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Abbett and Franklin Small
The main advantage of trading using opposite L Abbett and Franklin Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Abbett position performs unexpectedly, Franklin Small 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 Small will offset losses from the drop in Franklin Small's long position.| L Abbett vs. Rbc Funds Trust | L Abbett vs. Dreyfusstandish Global Fixed | L Abbett vs. Rbb Fund | L Abbett vs. Rbc Global Equity |
| Franklin Small vs. Dunham Porategovernment Bond | Franklin Small vs. Schwab Government Money | Franklin Small vs. Virtus Seix Government | Franklin Small vs. Elfun Government Money |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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