Correlation Between Franklin Lifesmart and Pimco All
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Pimco All 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 Pimco All 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 Pimco All Asset, you can compare the effects of market volatilities on Franklin Lifesmart and Pimco All 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 Pimco All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Pimco All.
Diversification Opportunities for Franklin Lifesmart and Pimco All
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Pimco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Pimco All Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco All Asset 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 Pimco All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco All Asset has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Pimco All go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Pimco All
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.3 times less return on investment than Pimco All. In addition to that, Franklin Lifesmart is 1.17 times more volatile than Pimco All Asset. It trades about 0.12 of its total potential returns per unit of risk. Pimco All Asset is currently generating about 0.18 per unit of volatility. If you would invest 1,072 in Pimco All Asset on October 25, 2024 and sell it today you would earn a total of 12.00 from holding Pimco All Asset or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Pimco All Asset
Performance |
| Timeline |
| Franklin Lifesmart |
| Pimco All Asset |
Franklin Lifesmart and Pimco All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Pimco All
The main advantage of trading using opposite Franklin Lifesmart and Pimco All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Pimco All 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 Pimco All will offset losses from the drop in Pimco All's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. Blackrock Lifepath Idx | Franklin Lifesmart vs. Aquagold International | Franklin Lifesmart vs. Morningstar Unconstrained Allocation |
| Pimco All vs. Blackstone Secured Lending | Pimco All vs. T Rowe Price | Pimco All vs. Pimco Capital Sec | Pimco All vs. T Rowe Price |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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