Correlation Between Franklin Lifesmart and Health Biotchnology
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Health Biotchnology 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 Health Biotchnology 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 Health Biotchnology Portfolio, you can compare the effects of market volatilities on Franklin Lifesmart and Health Biotchnology 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 Health Biotchnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Health Biotchnology.
Diversification Opportunities for Franklin Lifesmart and Health Biotchnology
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Health is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Health Biotchnology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Biotchnology 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 Health Biotchnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Biotchnology has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Health Biotchnology go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Health Biotchnology
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.5 times more return on investment than Health Biotchnology. However, Franklin Lifesmart Retirement is 1.99 times less risky than Health Biotchnology. It trades about 0.1 of its potential returns per unit of risk. Health Biotchnology Portfolio is currently generating about 0.01 per unit of risk. If you would invest 898.00 in Franklin Lifesmart Retirement on September 3, 2024 and sell it today you would earn a total of 187.00 from holding Franklin Lifesmart Retirement or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Health Biotchnology Portfolio
Performance |
| Timeline |
| Franklin Lifesmart |
| Health Biotchnology |
Franklin Lifesmart and Health Biotchnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Health Biotchnology
The main advantage of trading using opposite Franklin Lifesmart and Health Biotchnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Health Biotchnology 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 Health Biotchnology will offset losses from the drop in Health Biotchnology's long position.| Franklin Lifesmart vs. Health Biotchnology Portfolio | Franklin Lifesmart vs. Baillie Gifford Health | Franklin Lifesmart vs. Eventide Healthcare Life | Franklin Lifesmart vs. Health Biotchnology Portfolio |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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