Correlation Between Ab Value and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Ab Value and Franklin Lifesmart 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 Ab Value and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Ab Value and Franklin Lifesmart 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 Ab Value with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Franklin Lifesmart.
Diversification Opportunities for Ab Value and Franklin Lifesmart
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ABVCX and Franklin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Franklin Lifesmart 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2050 and Ab Value 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 Ab Value Fund are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2050 has no effect on the direction of Ab Value i.e., Ab Value and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Ab Value and Franklin Lifesmart
Assuming the 90 days horizon Ab Value Fund is expected to under-perform the Franklin Lifesmart. In addition to that, Ab Value is 1.0 times more volatile than Franklin Lifesmart 2050. It trades about -0.07 of its total potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.03 per unit of volatility. If you would invest 1,593 in Franklin Lifesmart 2050 on November 29, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Lifesmart 2050 or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Franklin Lifesmart 2050
Performance |
| Timeline |
| Ab Value Fund |
| Franklin Lifesmart 2050 |
Ab Value and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Franklin Lifesmart
The main advantage of trading using opposite Ab Value and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Ab Value vs. Alpine Ultra Short | Ab Value vs. Us Government Securities | Ab Value vs. Ab Municipal Bond | Ab Value vs. Prudential California Muni |
| Franklin Lifesmart vs. Access Flex High | Franklin Lifesmart vs. Pioneer High Income | Franklin Lifesmart vs. Ab High Income | Franklin Lifesmart vs. Siit High Yield |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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