Correlation Between Dodge Cox and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Dodge Cox 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 Dodge Cox and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Dodge Cox 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 Dodge Cox with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Lifesmart.
Diversification Opportunities for Dodge Cox and Franklin Lifesmart
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Franklin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Dodge Cox 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 Dodge Cox Stock 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 Dodge Cox i.e., Dodge Cox and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Lifesmart
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Franklin Lifesmart. In addition to that, Dodge Cox is 2.38 times more volatile than Franklin Lifesmart Retirement. It trades about -0.17 of its total potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.28 per unit of volatility. If you would invest 1,074 in Franklin Lifesmart Retirement on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Lifesmart Retirement or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Dodge Cox Stock |
| Franklin Lifesmart |
Dodge Cox and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Lifesmart
The main advantage of trading using opposite Dodge Cox and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox 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.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
| Franklin Lifesmart vs. Delaware Investments Ultrashort | Franklin Lifesmart vs. Quantitative Longshort Equity | Franklin Lifesmart vs. Aqr Long Short Equity | Franklin Lifesmart vs. Dreyfus Short Intermediate |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |