Correlation Between Franklin Lifesmart and Catalyst/millburn
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Catalyst/millburn 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 Catalyst/millburn 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 Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Franklin Lifesmart and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Catalyst/millburn.
Diversification Opportunities for Franklin Lifesmart and Catalyst/millburn
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Catalyst/millburn is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Catalyst/millburn go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Catalyst/millburn
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.5 times more return on investment than Catalyst/millburn. However, Franklin Lifesmart Retirement is 2.0 times less risky than Catalyst/millburn. It trades about 0.1 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.04 per unit of risk. If you would invest 896.00 in Franklin Lifesmart Retirement on October 31, 2024 and sell it today you would earn a total of 167.00 from holding Franklin Lifesmart Retirement or generate 18.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Franklin Lifesmart |
| Catalystmillburn Hedge |
Franklin Lifesmart and Catalyst/millburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Catalyst/millburn
The main advantage of trading using opposite Franklin Lifesmart and Catalyst/millburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Catalyst/millburn 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 Catalyst/millburn will offset losses from the drop in Catalyst/millburn's long position.| Franklin Lifesmart vs. First Eagle Gold | Franklin Lifesmart vs. Goldman Sachs Strategic | Franklin Lifesmart vs. Wells Fargo Advantage | Franklin Lifesmart vs. Wells Fargo Advantage |
| Catalyst/millburn vs. Elfun Government Money | Catalyst/millburn vs. Aig Government Money | Catalyst/millburn vs. Dws Government Money | Catalyst/millburn vs. Ubs Money Series |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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