Correlation Between Fabxx and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Fabxx 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 Fabxx and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Franklin Lifesmart 2055, you can compare the effects of market volatilities on Fabxx 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 Fabxx with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Franklin Lifesmart.
Diversification Opportunities for Fabxx and Franklin Lifesmart
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fabxx and Franklin is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Franklin Lifesmart 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2055 and Fabxx 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 Fabxx 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 2055 has no effect on the direction of Fabxx i.e., Fabxx and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Fabxx and Franklin Lifesmart
Assuming the 90 days horizon Fabxx is expected to generate 5.51 times more return on investment than Franklin Lifesmart. However, Fabxx is 5.51 times more volatile than Franklin Lifesmart 2055. It trades about 0.02 of its potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.09 per unit of risk. If you would invest 226.00 in Fabxx on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Fabxx or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.22% |
| Values | Daily Returns |
Fabxx vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Fabxx |
| Franklin Lifesmart 2055 |
Fabxx and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Franklin Lifesmart
The main advantage of trading using opposite Fabxx and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx 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.| Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard 500 Index | Fabxx vs. Vanguard Total Stock | Fabxx vs. Vanguard Total Stock |
| Franklin Lifesmart vs. Principal Lifetime Hybrid | Franklin Lifesmart vs. Legg Mason Bw | Franklin Lifesmart vs. Delaware Limited Term Diversified | Franklin Lifesmart vs. Blackrock Sm Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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