Correlation Between Lord Abbett and Franklin High
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Franklin High 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 High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Small and Franklin High Yield, you can compare the effects of market volatilities on Lord Abbett and Franklin High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Franklin High.
Diversification Opportunities for Lord Abbett and Franklin High
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lord and Franklin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Small and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield 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 Small are associated (or correlated) with Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Lord Abbett i.e., Lord Abbett and Franklin High go up and down completely randomly.
Pair Corralation between Lord Abbett and Franklin High
Assuming the 90 days horizon Lord Abbett Small is expected to generate 4.05 times more return on investment than Franklin High. However, Lord Abbett is 4.05 times more volatile than Franklin High Yield. It trades about 0.07 of its potential returns per unit of risk. Franklin High Yield is currently generating about 0.07 per unit of risk. If you would invest 1,754 in Lord Abbett Small on September 3, 2024 and sell it today you would earn a total of 729.00 from holding Lord Abbett Small or generate 41.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Small vs. Franklin High Yield
Performance |
| Timeline |
| Lord Abbett Small |
| Franklin High Yield |
Lord Abbett and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Franklin High
The main advantage of trading using opposite Lord Abbett and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.| Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Vanguard Small Cap Value | Lord Abbett vs. Us Small Cap | Lord Abbett vs. Us Targeted Value |
| Franklin High vs. T Rowe Price | Franklin High vs. Artisan Emerging Markets | Franklin High vs. Arrow Managed Futures | Franklin High vs. T Rowe Price |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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