Correlation Between Franklin Lifesmart and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Financial Industries 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 Financial Industries 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 Financial Industries Fund, you can compare the effects of market volatilities on Franklin Lifesmart and Financial Industries 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 Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Financial Industries.
Diversification Opportunities for Franklin Lifesmart and Financial Industries
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Financial is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries 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 Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Financial Industries go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Financial Industries
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.76 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Franklin Lifesmart 2060 is 1.44 times less risky than Financial Industries. It trades about 0.28 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,801 in Financial Industries Fund on November 2, 2024 and sell it today you would earn a total of 127.00 from holding Financial Industries Fund or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2060 vs. Financial Industries Fund
Performance |
| Timeline |
| Franklin Lifesmart 2060 |
| Financial Industries |
Franklin Lifesmart and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Financial Industries
The main advantage of trading using opposite Franklin Lifesmart and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' 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 |
| Financial Industries vs. Columbia Capital Allocation | Financial Industries vs. Federated Hermes Conservative | Financial Industries vs. Valic Company I | Financial Industries vs. Vy T Rowe |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |