Correlation Between Barloworld and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Barloworld 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 Barloworld and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Barloworld 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 Barloworld with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Franklin Lifesmart.
Diversification Opportunities for Barloworld and Franklin Lifesmart
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barloworld and Franklin is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Barloworld 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 Barloworld Ltd ADR 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 Barloworld i.e., Barloworld and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Barloworld and Franklin Lifesmart
Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Franklin Lifesmart. In addition to that, Barloworld is 10.31 times more volatile than Franklin Lifesmart Retirement. It trades about -0.14 of its total potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.1 per unit of volatility. If you would invest 1,044 in Franklin Lifesmart Retirement on November 27, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Lifesmart Retirement or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Barloworld ADR |
| Franklin Lifesmart |
Barloworld and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Franklin Lifesmart
The main advantage of trading using opposite Barloworld and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Franklin Lifesmart vs. Ab Bond Inflation | Franklin Lifesmart vs. Gmo High Yield | Franklin Lifesmart vs. Doubleline Emerging Markets | Franklin Lifesmart vs. Ms Global Fixed |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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