Correlation Between Franklin Lifesmart and Transamerica Cleartrack
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Transamerica Cleartrack 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 Transamerica Cleartrack 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 Transamerica Cleartrack Retirement, you can compare the effects of market volatilities on Franklin Lifesmart and Transamerica Cleartrack 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 Transamerica Cleartrack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Transamerica Cleartrack.
Diversification Opportunities for Franklin Lifesmart and Transamerica Cleartrack
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FRANKLIN and Transamerica is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Transamerica Cleartrack Retire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Cleartrack 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 Transamerica Cleartrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Cleartrack has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Transamerica Cleartrack go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Transamerica Cleartrack
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.3 times less return on investment than Transamerica Cleartrack. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 1.16 times less risky than Transamerica Cleartrack. It trades about 0.17 of its potential returns per unit of risk. Transamerica Cleartrack Retirement is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 823.00 in Transamerica Cleartrack Retirement on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Transamerica Cleartrack Retirement or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Transamerica Cleartrack Retire
Performance |
| Timeline |
| Franklin Lifesmart |
| Transamerica Cleartrack |
Franklin Lifesmart and Transamerica Cleartrack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Transamerica Cleartrack
The main advantage of trading using opposite Franklin Lifesmart and Transamerica Cleartrack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Transamerica Cleartrack 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 Transamerica Cleartrack will offset losses from the drop in Transamerica Cleartrack'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 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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