Correlation Between Franklin Lifesmart and Siit Small
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Siit Small 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 Siit Small 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 Siit Small Cap, you can compare the effects of market volatilities on Franklin Lifesmart and Siit Small 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 Siit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Siit Small.
Diversification Opportunities for Franklin Lifesmart and Siit Small
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Siit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Siit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Small Cap 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 Siit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Small Cap has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Siit Small go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Siit Small
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 6.9 times less return on investment than Siit Small. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 5.21 times less risky than Siit Small. It trades about 0.17 of its potential returns per unit of risk. Siit Small Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,210 in Siit Small Cap on August 31, 2024 and sell it today you would earn a total of 99.00 from holding Siit Small Cap or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Siit Small Cap
Performance |
| Timeline |
| Franklin Lifesmart |
| Siit Small Cap |
Franklin Lifesmart and Siit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Siit Small
The main advantage of trading using opposite Franklin Lifesmart and Siit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Siit Small 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 Siit Small will offset losses from the drop in Siit Small's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. Jpmorgan Smartretirement Income | Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Aquagold International |
| Siit Small vs. Lifestyle Ii Moderate | Siit Small vs. Moderately Aggressive Balanced | Siit Small vs. Franklin Lifesmart Retirement | Siit Small vs. Blackrock Moderate Prepared |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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