Correlation Between Franklin Lifesmart and Aam Select
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Aam Select 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 Franklin Lifesmart and Aam Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2060 and Aam Select Income, you can compare the effects of market volatilities on Franklin Lifesmart and Aam Select 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 Franklin Lifesmart with a short position of Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Aam Select.
Diversification Opportunities for Franklin Lifesmart and Aam Select
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Aam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income and Franklin Lifesmart 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 Franklin Lifesmart 2060 are associated (or correlated) with Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Aam Select go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Aam Select
Assuming the 90 days horizon Franklin Lifesmart 2060 is expected to generate 2.5 times more return on investment than Aam Select. However, Franklin Lifesmart is 2.5 times more volatile than Aam Select Income. It trades about 0.07 of its potential returns per unit of risk. Aam Select Income is currently generating about 0.08 per unit of risk. If you would invest 1,158 in Franklin Lifesmart 2060 on September 13, 2024 and sell it today you would earn a total of 75.00 from holding Franklin Lifesmart 2060 or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2060 vs. Aam Select Income
Performance |
| Timeline |
| Franklin Lifesmart 2060 |
| Aam Select Income |
Franklin Lifesmart and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Aam Select
The main advantage of trading using opposite Franklin Lifesmart and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
| Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aambahl Gaynor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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