Correlation Between Franklin Lifesmart and Gmo High
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Gmo 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 Gmo 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 Gmo High Yield, you can compare the effects of market volatilities on Franklin Lifesmart and Gmo 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 Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Gmo High.
Diversification Opportunities for Franklin Lifesmart and Gmo High
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Gmo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2060 and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo 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 Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Gmo High go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Gmo High
Assuming the 90 days horizon Franklin Lifesmart 2060 is expected to generate 3.4 times more return on investment than Gmo High. However, Franklin Lifesmart is 3.4 times more volatile than Gmo High Yield. It trades about 0.15 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.17 per unit of risk. If you would invest 1,184 in Franklin Lifesmart 2060 on September 12, 2024 and sell it today you would earn a total of 63.00 from holding Franklin Lifesmart 2060 or generate 5.32% 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. Gmo High Yield
Performance |
| Timeline |
| Franklin Lifesmart 2060 |
| Gmo High Yield |
Franklin Lifesmart and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Gmo High
The main advantage of trading using opposite Franklin Lifesmart and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Gmo 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 Gmo High will offset losses from the drop in Gmo High's long position.| Franklin Lifesmart vs. Franklin High Yield | Franklin Lifesmart vs. Dws Government Money | Franklin Lifesmart vs. Alliancebernstein National Municipal | Franklin Lifesmart vs. Dreyfusstandish Global Fixed |
| Gmo High vs. Artisan High Income | Gmo High vs. Blackrock High Yield | Gmo High vs. Pax High Yield | Gmo High vs. Msift High Yield |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |