Correlation Between Franklin Lifesmart and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Dreyfus Technology 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 Dreyfus Technology 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 Dreyfus Technology Growth, you can compare the effects of market volatilities on Franklin Lifesmart and Dreyfus Technology 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 Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Dreyfus Technology.
Diversification Opportunities for Franklin Lifesmart and Dreyfus Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Dreyfus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth 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 Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Dreyfus Technology
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to under-perform the Dreyfus Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Lifesmart Retirement is 2.98 times less risky than Dreyfus Technology. The mutual fund trades about -0.31 of its potential returns per unit of risk. The Dreyfus Technology Growth is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 7,943 in Dreyfus Technology Growth on October 11, 2024 and sell it today you would lose (130.00) from holding Dreyfus Technology Growth or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Franklin Lifesmart |
| Dreyfus Technology Growth |
Franklin Lifesmart and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Dreyfus Technology
The main advantage of trading using opposite Franklin Lifesmart and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Dreyfus Technology 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 Dreyfus Technology will offset losses from the drop in Dreyfus Technology's long position.| Franklin Lifesmart vs. Texton Property | Franklin Lifesmart vs. Tiaa Cref Real Estate | Franklin Lifesmart vs. Rems Real Estate | Franklin Lifesmart vs. Jhancock Real Estate |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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