Correlation Between Franklin Lifesmart and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Templeton Growth 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 Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2030 and Templeton Growth Fund, you can compare the effects of market volatilities on Franklin Lifesmart and Templeton Growth 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 Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Templeton Growth.
Diversification Opportunities for Franklin Lifesmart and Templeton Growth
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Templeton is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2030 and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth 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 2030 are associated (or correlated) with Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Templeton Growth go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Templeton Growth
Assuming the 90 days horizon Franklin Lifesmart 2030 is expected to generate 0.69 times more return on investment than Templeton Growth. However, Franklin Lifesmart 2030 is 1.44 times less risky than Templeton Growth. It trades about 0.09 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 1,306 in Franklin Lifesmart 2030 on August 27, 2024 and sell it today you would earn a total of 114.00 from holding Franklin Lifesmart 2030 or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2030 vs. Templeton Growth Fund
Performance |
| Timeline |
| Franklin Lifesmart 2030 |
| Templeton Growth |
Franklin Lifesmart and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Templeton Growth
The main advantage of trading using opposite Franklin Lifesmart and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Templeton Growth 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 Templeton Growth will offset losses from the drop in Templeton Growth's long position.| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
| Templeton Growth vs. Franklin Mutual Beacon | Templeton Growth vs. Templeton Developing Markets | Templeton Growth vs. Franklin Mutual Global | Templeton Growth vs. Franklin Mutual Global |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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