Correlation Between Franklin Lifesmart and Fa529 Gr
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Fa529 Gr 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 Fa529 Gr 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 Fa529 Gr Op, you can compare the effects of market volatilities on Franklin Lifesmart and Fa529 Gr 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 Fa529 Gr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Fa529 Gr.
Diversification Opportunities for Franklin Lifesmart and Fa529 Gr
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Fa529 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Fa529 Gr Op in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa529 Gr Op 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 Fa529 Gr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa529 Gr Op has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Fa529 Gr go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Fa529 Gr
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 3.41 times less return on investment than Fa529 Gr. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 3.76 times less risky than Fa529 Gr. It trades about 0.12 of its potential returns per unit of risk. Fa529 Gr Op is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,970 in Fa529 Gr Op on November 5, 2024 and sell it today you would earn a total of 2,420 from holding Fa529 Gr Op or generate 48.69% 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. Fa529 Gr Op
Performance |
| Timeline |
| Franklin Lifesmart |
| Fa529 Gr Op |
Franklin Lifesmart and Fa529 Gr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Fa529 Gr
The main advantage of trading using opposite Franklin Lifesmart and Fa529 Gr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Fa529 Gr 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 Fa529 Gr will offset losses from the drop in Fa529 Gr's long position.| Franklin Lifesmart vs. Jpmorgan Ultra Short Municipal | Franklin Lifesmart vs. Old Westbury California | Franklin Lifesmart vs. Oklahoma Municipal Fund | Franklin Lifesmart vs. Franklin Adjustable Government |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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