Correlation Between Lord Abbett and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Franklin Federal 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 Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Diversified and Franklin Federal Tax Free, you can compare the effects of market volatilities on Lord Abbett and Franklin Federal 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 Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Franklin Federal.
Diversification Opportunities for Lord Abbett and Franklin Federal
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lord and Franklin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax 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 Diversified are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Lord Abbett i.e., Lord Abbett and Franklin Federal go up and down completely randomly.
Pair Corralation between Lord Abbett and Franklin Federal
Assuming the 90 days horizon Lord Abbett Diversified is expected to under-perform the Franklin Federal. In addition to that, Lord Abbett is 1.98 times more volatile than Franklin Federal Tax Free. It trades about -0.25 of its total potential returns per unit of risk. Franklin Federal Tax Free is currently generating about -0.01 per unit of volatility. If you would invest 1,081 in Franklin Federal Tax Free on January 5, 2025 and sell it today you would lose (1.00) from holding Franklin Federal Tax Free or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Lord Abbett Diversified |
| Franklin Federal Tax |
Lord Abbett and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Franklin Federal
The main advantage of trading using opposite Lord Abbett and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Franklin Federal 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 Federal will offset losses from the drop in Franklin Federal's long position.| Lord Abbett vs. Guidepath Conservative Income | Lord Abbett vs. Tax Free Conservative Income | Lord Abbett vs. Aqr Diversified Arbitrage | Lord Abbett vs. Prudential Core Conservative |
| Franklin Federal vs. Global Gold Fund | Franklin Federal vs. Franklin Gold Precious | Franklin Federal vs. Gamco Global Gold | Franklin Federal vs. International Investors Gold |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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