Correlation Between Franklin Lifesmart and Guidepath(r) Tactical
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Guidepath(r) Tactical 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 Guidepath(r) Tactical 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 Guidepath Tactical Allocation, you can compare the effects of market volatilities on Franklin Lifesmart and Guidepath(r) Tactical 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 Guidepath(r) Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Guidepath(r) Tactical.
Diversification Opportunities for Franklin Lifesmart and Guidepath(r) Tactical
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FRANKLIN and Guidepath(r) is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Guidepath Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath(r) Tactical 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 Guidepath(r) Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath(r) Tactical has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Guidepath(r) Tactical go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Guidepath(r) Tactical
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.8 times less return on investment than Guidepath(r) Tactical. But when comparing it to its historical volatility, Franklin Lifesmart 2050 is 1.35 times less risky than Guidepath(r) Tactical. It trades about 0.3 of its potential returns per unit of risk. Guidepath Tactical Allocation is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,421 in Guidepath Tactical Allocation on September 5, 2024 and sell it today you would earn a total of 95.00 from holding Guidepath Tactical Allocation or generate 6.69% 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 2050 vs. Guidepath Tactical Allocation
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Guidepath(r) Tactical |
Franklin Lifesmart and Guidepath(r) Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Guidepath(r) Tactical
The main advantage of trading using opposite Franklin Lifesmart and Guidepath(r) Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Guidepath(r) Tactical 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 Guidepath(r) Tactical will offset losses from the drop in Guidepath(r) Tactical's long position.| Franklin Lifesmart vs. Qs Moderate Growth | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. Virtus Dfa 2040 |
| Guidepath(r) Tactical vs. Franklin Lifesmart 2050 | Guidepath(r) Tactical vs. T Rowe Price | Guidepath(r) Tactical vs. T Rowe Price | Guidepath(r) Tactical vs. Hood River New |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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