Correlation Between Lord Abbett and Franklin Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Franklin Pennsylvania 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 Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Intermediate and Franklin Pennsylvania Tax Free, you can compare the effects of market volatilities on Lord Abbett and Franklin Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Franklin Pennsylvania.
Diversification Opportunities for Lord Abbett and Franklin Pennsylvania
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Lord and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Intermediate and Franklin Pennsylvania Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Pennsylvania 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 Intermediate are associated (or correlated) with Franklin Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Pennsylvania has no effect on the direction of Lord Abbett i.e., Lord Abbett and Franklin Pennsylvania go up and down completely randomly.
Pair Corralation between Lord Abbett and Franklin Pennsylvania
Assuming the 90 days horizon Lord Abbett Intermediate is expected to generate 0.71 times more return on investment than Franklin Pennsylvania. However, Lord Abbett Intermediate is 1.41 times less risky than Franklin Pennsylvania. It trades about -0.34 of its potential returns per unit of risk. Franklin Pennsylvania Tax Free is currently generating about -0.36 per unit of risk. If you would invest 1,037 in Lord Abbett Intermediate on October 9, 2024 and sell it today you would lose (14.00) from holding Lord Abbett Intermediate or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Intermediate vs. Franklin Pennsylvania Tax Free
Performance |
| Timeline |
| Lord Abbett Intermediate |
| Franklin Pennsylvania |
Lord Abbett and Franklin Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Franklin Pennsylvania
The main advantage of trading using opposite Lord Abbett and Franklin Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Franklin Pennsylvania 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 Pennsylvania will offset losses from the drop in Franklin Pennsylvania's long position.| Lord Abbett vs. Federated Hermes Conservative | Lord Abbett vs. Huber Capital Diversified | Lord Abbett vs. Tax Free Conservative Income | Lord Abbett vs. Thrivent Diversified Income |
| Franklin Pennsylvania vs. Franklin Mutual Beacon | Franklin Pennsylvania vs. Templeton Developing Markets | Franklin Pennsylvania vs. Franklin Mutual Global | Franklin Pennsylvania 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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