Correlation Between Franklin Lifesmart and Inverse Sp
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Inverse Sp 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 Inverse Sp 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 Inverse Sp 500, you can compare the effects of market volatilities on Franklin Lifesmart and Inverse Sp 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 Inverse Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Inverse Sp.
Diversification Opportunities for Franklin Lifesmart and Inverse Sp
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Franklin and Inverse is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Inverse Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Sp 500 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 Inverse Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Sp 500 has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Inverse Sp go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Inverse Sp
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.49 times more return on investment than Inverse Sp. However, Franklin Lifesmart Retirement is 2.05 times less risky than Inverse Sp. It trades about 0.1 of its potential returns per unit of risk. Inverse Sp 500 is currently generating about -0.04 per unit of risk. If you would invest 1,055 in Franklin Lifesmart Retirement on November 5, 2024 and sell it today you would earn a total of 8.00 from holding Franklin Lifesmart Retirement or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Inverse Sp 500
Performance |
| Timeline |
| Franklin Lifesmart |
| Inverse Sp 500 |
Franklin Lifesmart and Inverse Sp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Inverse Sp
The main advantage of trading using opposite Franklin Lifesmart and Inverse Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Inverse Sp 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 Inverse Sp will offset losses from the drop in Inverse Sp'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 |
| Inverse Sp vs. Firsthand Alternative Energy | Inverse Sp vs. Short Oil Gas | Inverse Sp vs. Oil Gas Ultrasector | Inverse Sp vs. Thrivent Natural Resources |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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