Correlation Between Franklin Lifesmart and Fulcrum Diversified
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Fulcrum Diversified 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 Fulcrum Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2050 and Fulcrum Diversified Absolute, you can compare the effects of market volatilities on Franklin Lifesmart and Fulcrum Diversified 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 Fulcrum Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Fulcrum Diversified.
Diversification Opportunities for Franklin Lifesmart and Fulcrum Diversified
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Fulcrum is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Fulcrum Diversified Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Diversified 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 2050 are associated (or correlated) with Fulcrum Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Diversified has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Fulcrum Diversified go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Fulcrum Diversified
Assuming the 90 days horizon Franklin Lifesmart 2050 is expected to generate 1.72 times more return on investment than Fulcrum Diversified. However, Franklin Lifesmart is 1.72 times more volatile than Fulcrum Diversified Absolute. It trades about 0.07 of its potential returns per unit of risk. Fulcrum Diversified Absolute is currently generating about 0.07 per unit of risk. If you would invest 1,532 in Franklin Lifesmart 2050 on November 1, 2024 and sell it today you would earn a total of 43.00 from holding Franklin Lifesmart 2050 or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Fulcrum Diversified Absolute
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Fulcrum Diversified |
Franklin Lifesmart and Fulcrum Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Fulcrum Diversified
The main advantage of trading using opposite Franklin Lifesmart and Fulcrum Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Fulcrum Diversified 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 Fulcrum Diversified will offset losses from the drop in Fulcrum Diversified's long position.| Franklin Lifesmart vs. Rmb Mendon Financial | Franklin Lifesmart vs. Vanguard Financials Index | Franklin Lifesmart vs. Blackstone Secured Lending | Franklin Lifesmart vs. T Rowe Price |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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