Correlation Between Franklin Lifesmart and Federated Corporate
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Federated Corporate 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 Federated Corporate 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 Federated Porate Bond, you can compare the effects of market volatilities on Franklin Lifesmart and Federated Corporate 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 Federated Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Federated Corporate.
Diversification Opportunities for Franklin Lifesmart and Federated Corporate
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Federated is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Federated Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Porate 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 Federated Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Porate Bond has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Federated Corporate go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Federated Corporate
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 1.02 times more return on investment than Federated Corporate. However, Franklin Lifesmart is 1.02 times more volatile than Federated Porate Bond. It trades about 0.13 of its potential returns per unit of risk. Federated Porate Bond is currently generating about 0.01 per unit of risk. If you would invest 1,008 in Franklin Lifesmart Retirement on November 3, 2024 and sell it today you would earn a total of 55.00 from holding Franklin Lifesmart Retirement or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Federated Porate Bond
Performance |
| Timeline |
| Franklin Lifesmart |
| Federated Porate Bond |
Franklin Lifesmart and Federated Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Federated Corporate
The main advantage of trading using opposite Franklin Lifesmart and Federated Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Federated Corporate 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 Federated Corporate will offset losses from the drop in Federated Corporate's long position.| Franklin Lifesmart vs. Rationalpier 88 Convertible | Franklin Lifesmart vs. Allianzgi Convertible Income | Franklin Lifesmart vs. Virtus Convertible | Franklin Lifesmart vs. Absolute Convertible Arbitrage |
| Federated Corporate vs. Cref Inflation Linked Bond | Federated Corporate vs. Guggenheim Managed Futures | Federated Corporate vs. Guidepath Managed Futures | Federated Corporate vs. Atac Inflation Rotation |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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