Correlation Between Franklin Lifesmart and Capital World
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Capital World 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 Capital World 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 Capital World Bond, you can compare the effects of market volatilities on Franklin Lifesmart and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Capital World.
Diversification Opportunities for Franklin Lifesmart and Capital World
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Capital is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Capital World go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Capital World
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.89 times more return on investment than Capital World. However, Franklin Lifesmart Retirement is 1.13 times less risky than Capital World. It trades about 0.15 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.04 per unit of risk. If you would invest 1,023 in Franklin Lifesmart Retirement on September 3, 2024 and sell it today you would earn a total of 62.00 from holding Franklin Lifesmart Retirement or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Capital World Bond
Performance |
| Timeline |
| Franklin Lifesmart |
| Capital World Bond |
Franklin Lifesmart and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Capital World
The main advantage of trading using opposite Franklin Lifesmart and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Franklin Lifesmart vs. Health Biotchnology Portfolio | Franklin Lifesmart vs. Baillie Gifford Health | Franklin Lifesmart vs. Eventide Healthcare Life | Franklin Lifesmart vs. Health Biotchnology Portfolio |
| Capital World vs. Locorr Longshort Modities | Capital World vs. Federated Short Term Income | Capital World vs. Barings Active Short | Capital World vs. Siit Ultra Short |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |