Correlation Between Franklin Lifesmart and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Mainstay Large 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 Mainstay Large 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 Mainstay Large Cap, you can compare the effects of market volatilities on Franklin Lifesmart and Mainstay Large 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 Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Mainstay Large.
Diversification Opportunities for Franklin Lifesmart and Mainstay Large
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FRANKLIN and Mainstay is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap 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 Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Mainstay Large go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Mainstay Large
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.56 times less return on investment than Mainstay Large. But when comparing it to its historical volatility, Franklin Lifesmart 2050 is 1.63 times less risky than Mainstay Large. It trades about 0.09 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 870.00 in Mainstay Large Cap on September 4, 2024 and sell it today you would earn a total of 548.00 from holding Mainstay Large Cap or generate 62.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Mainstay Large Cap
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Mainstay Large Cap |
Franklin Lifesmart and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Mainstay Large
The main advantage of trading using opposite Franklin Lifesmart and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Mainstay Large 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 Mainstay Large will offset losses from the drop in Mainstay Large'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 |
| Mainstay Large vs. The Emerging Markets | Mainstay Large vs. Morgan Stanley Emerging | Mainstay Large vs. Kinetics Market Opportunities | Mainstay Large vs. Oklahoma College Savings |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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