Correlation Between Franklin Lifesmart and Franklin High
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Franklin High 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 Franklin High 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 Franklin High Yield, you can compare the effects of market volatilities on Franklin Lifesmart and Franklin High 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 Franklin High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Franklin High.
Diversification Opportunities for Franklin Lifesmart and Franklin High
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Franklin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Franklin High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Yield 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 Franklin High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Yield has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Franklin High go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Franklin High
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.31 times less return on investment than Franklin High. In addition to that, Franklin Lifesmart is 2.72 times more volatile than Franklin High Yield. It trades about 0.11 of its total potential returns per unit of risk. Franklin High Yield is currently generating about 0.39 per unit of volatility. If you would invest 919.00 in Franklin High Yield on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Franklin High Yield or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2060 vs. Franklin High Yield
Performance |
| Timeline |
| Franklin Lifesmart 2060 |
| Franklin High Yield |
Franklin Lifesmart and Franklin High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Franklin High
The main advantage of trading using opposite Franklin Lifesmart and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High'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 |
| Franklin High vs. Franklin Mutual Beacon | Franklin High vs. Templeton Developing Markets | Franklin High vs. Franklin Mutual Global | Franklin High vs. Franklin Mutual Global |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |