Correlation Between Franklin Lifesmart and Ab Select
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Ab 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 Ab 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 Ab Select Equity, you can compare the effects of market volatilities on Franklin Lifesmart and Ab 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Ab Select.
Diversification Opportunities for Franklin Lifesmart and Ab Select
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and AUUIX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity 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 Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Ab Select go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Ab Select
Assuming the 90 days horizon Franklin Lifesmart 2060 is expected to generate 0.26 times more return on investment than Ab Select. However, Franklin Lifesmart 2060 is 3.91 times less risky than Ab Select. It trades about 0.18 of its potential returns per unit of risk. Ab Select Equity is currently generating about -0.21 per unit of risk. If you would invest 1,221 in Franklin Lifesmart 2060 on September 15, 2024 and sell it today you would earn a total of 20.00 from holding Franklin Lifesmart 2060 or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2060 vs. Ab Select Equity
Performance |
| Timeline |
| Franklin Lifesmart 2060 |
| Ab Select Equity |
Franklin Lifesmart and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Ab Select
The main advantage of trading using opposite Franklin Lifesmart and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Ab 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 Ab Select will offset losses from the drop in Ab Select's long position.| Franklin Lifesmart vs. Ab Select Equity | Franklin Lifesmart vs. Us Vector Equity | Franklin Lifesmart vs. Ab Fixed Income Shares | Franklin Lifesmart vs. Rbc Global Equity |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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