Correlation Between Franklin Lifesmart and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Franklin Lifesmart and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Franklin Mutual.
Diversification Opportunities for Franklin Lifesmart and Franklin Mutual
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Franklin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2030 and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Franklin Mutual go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Franklin Mutual
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 3.49 times less return on investment than Franklin Mutual. But when comparing it to its historical volatility, Franklin Lifesmart 2030 is 1.44 times less risky than Franklin Mutual. It trades about 0.05 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,702 in Franklin Mutual Beacon on August 25, 2024 and sell it today you would earn a total of 30.00 from holding Franklin Mutual Beacon or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2030 vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Franklin Lifesmart 2030 |
| Franklin Mutual Beacon |
Franklin Lifesmart and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Franklin Mutual
The main advantage of trading using opposite Franklin Lifesmart and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual'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 |
| Franklin Mutual vs. Franklin High Income | Franklin Mutual vs. Goldman Sachs High | Franklin Mutual vs. California High Yield Municipal | Franklin Mutual vs. Morningstar Aggressive Growth |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |