Correlation Between Ab Global and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Global 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 Global Risk and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Ab Global 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 Global with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Franklin Lifesmart.
Diversification Opportunities for Ab Global and Franklin Lifesmart
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CBSYX and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Ab Global 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 Global Risk 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 Ab Global i.e., Ab Global and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Ab Global and Franklin Lifesmart
Assuming the 90 days horizon Ab Global Risk is expected to generate 1.34 times more return on investment than Franklin Lifesmart. However, Ab Global is 1.34 times more volatile than Franklin Lifesmart Retirement. It trades about 0.41 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.35 per unit of risk. If you would invest 1,758 in Ab Global Risk on September 5, 2024 and sell it today you would earn a total of 58.00 from holding Ab Global Risk or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Global Risk vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Ab Global Risk |
| Franklin Lifesmart |
Ab Global and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Franklin Lifesmart
The main advantage of trading using opposite Ab Global and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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 Global vs. Artisan Select Equity | Ab Global vs. Cutler Equity | Ab Global vs. Gmo Global Equity | Ab Global vs. Calamos Global Equity |
| Franklin Lifesmart vs. Ab Global Risk | Franklin Lifesmart vs. Pioneer High Yield | Franklin Lifesmart vs. Vanguard Star Fund | Franklin Lifesmart vs. Victory High Income |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |