Correlation Between Baron Health and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Baron Health 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 Baron Health and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Baron Health 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 Baron Health with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Franklin Lifesmart.
Diversification Opportunities for Baron Health and Franklin Lifesmart
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baron and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Baron Health 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 Baron Health Care 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 has no effect on the direction of Baron Health i.e., Baron Health and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Baron Health and Franklin Lifesmart
Assuming the 90 days horizon Baron Health is expected to generate 1.18 times less return on investment than Franklin Lifesmart. In addition to that, Baron Health is 2.25 times more volatile than Franklin Lifesmart Retirement. It trades about 0.03 of its total potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.09 per unit of volatility. If you would invest 900.00 in Franklin Lifesmart Retirement on September 3, 2024 and sell it today you would earn a total of 163.00 from holding Franklin Lifesmart Retirement or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Baron Health Care |
| Franklin Lifesmart |
Baron Health and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Franklin Lifesmart
The main advantage of trading using opposite Baron Health and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health 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.| Baron Health vs. Vanguard Health Care | Baron Health vs. Vanguard Health Care | Baron Health vs. T Rowe Price | Baron Health vs. T Rowe Price |
| Franklin Lifesmart vs. Live Oak Health | Franklin Lifesmart vs. Baron Health Care | Franklin Lifesmart vs. Eventide Healthcare Life | Franklin Lifesmart vs. Alphacentric Lifesci Healthcare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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