Correlation Between Franklin Lifesmart and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Baillie Gifford 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 Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart Retirement and Baillie Gifford Emerging, you can compare the effects of market volatilities on Franklin Lifesmart and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Baillie Gifford.
Diversification Opportunities for Franklin Lifesmart and Baillie Gifford
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FRANKLIN and Baillie is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging 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 Retirement are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Emerging has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Baillie Gifford go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Baillie Gifford
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.33 times more return on investment than Baillie Gifford. However, Franklin Lifesmart Retirement is 3.02 times less risky than Baillie Gifford. It trades about 0.17 of its potential returns per unit of risk. Baillie Gifford Emerging is currently generating about -0.19 per unit of risk. If you would invest 1,069 in Franklin Lifesmart Retirement on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Lifesmart Retirement or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Baillie Gifford Emerging
Performance |
| Timeline |
| Franklin Lifesmart |
| Baillie Gifford Emerging |
Franklin Lifesmart and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Baillie Gifford
The main advantage of trading using opposite Franklin Lifesmart and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. Jpmorgan Smartretirement Income | Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Aquagold International |
| Baillie Gifford vs. Franklin Lifesmart Retirement | Baillie Gifford vs. Moderately Aggressive Balanced | Baillie Gifford vs. Transamerica Cleartrack Retirement | Baillie Gifford vs. Pro Blend Moderate Term |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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