Correlation Between Pro Blend and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Pro Blend 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 Pro Blend and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pro Blend Moderate Term and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Pro Blend 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 Pro Blend with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Blend and Franklin Lifesmart.
Diversification Opportunities for Pro Blend and Franklin Lifesmart
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pro and Franklin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Pro Blend 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 Pro Blend Moderate Term 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 Pro Blend i.e., Pro Blend and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Pro Blend and Franklin Lifesmart
Assuming the 90 days horizon Pro Blend Moderate Term is expected to generate 1.1 times more return on investment than Franklin Lifesmart. However, Pro Blend is 1.1 times more volatile than Franklin Lifesmart Retirement. It trades about 0.12 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.12 per unit of risk. If you would invest 1,295 in Pro Blend Moderate Term on September 12, 2024 and sell it today you would earn a total of 210.00 from holding Pro Blend Moderate Term or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pro Blend Moderate Term vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Pro Blend Moderate |
| Franklin Lifesmart |
Pro Blend and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pro Blend and Franklin Lifesmart
The main advantage of trading using opposite Pro Blend and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pro Blend 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.| Pro Blend vs. Pro Blend Servative Term | Pro Blend vs. Pro Blend Extended Term | Pro Blend vs. Pro Blend Maximum Term | Pro Blend vs. Greenspring Fund Retail |
| Franklin Lifesmart vs. Jpmorgan Smartretirement Income | Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Barloworld Ltd ADR | Franklin Lifesmart vs. Morningstar Unconstrained Allocation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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