Correlation Between Franklin Lifesmart and Blackrock Government
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Blackrock Government 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 Blackrock Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2040 and Blackrock Government Bond, you can compare the effects of market volatilities on Franklin Lifesmart and Blackrock Government 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 Blackrock Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Blackrock Government.
Diversification Opportunities for Franklin Lifesmart and Blackrock Government
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franklin and Blackrock is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2040 and Blackrock Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Government Bond 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 2040 are associated (or correlated) with Blackrock Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Government Bond has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Blackrock Government go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Blackrock Government
Assuming the 90 days horizon Franklin Lifesmart 2040 is expected to generate 1.28 times more return on investment than Blackrock Government. However, Franklin Lifesmart is 1.28 times more volatile than Blackrock Government Bond. It trades about 0.28 of its potential returns per unit of risk. Blackrock Government Bond is currently generating about 0.13 per unit of risk. If you would invest 1,472 in Franklin Lifesmart 2040 on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Franklin Lifesmart 2040 or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2040 vs. Blackrock Government Bond
Performance |
| Timeline |
| Franklin Lifesmart 2040 |
| Blackrock Government Bond |
Franklin Lifesmart and Blackrock Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Blackrock Government
The main advantage of trading using opposite Franklin Lifesmart and Blackrock Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Blackrock Government 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 Blackrock Government will offset losses from the drop in Blackrock Government's long position.| Franklin Lifesmart vs. Vanguard Institutional Short Term | Franklin Lifesmart vs. Calvert Short Duration | Franklin Lifesmart vs. Touchstone Ultra Short | Franklin Lifesmart vs. Maryland Short Term Tax Free |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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