Correlation Between Franklin Lifesmart and Steelpath Select
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Steelpath Select 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 Steelpath Select 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 Steelpath Select 40, you can compare the effects of market volatilities on Franklin Lifesmart and Steelpath Select 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 Steelpath Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Steelpath Select.
Diversification Opportunities for Franklin Lifesmart and Steelpath Select
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Steelpath is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Steelpath Select 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelpath Select 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 Steelpath Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelpath Select has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Steelpath Select go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Steelpath Select
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 11.5 times less return on investment than Steelpath Select. But when comparing it to its historical volatility, Franklin Lifesmart 2050 is 2.06 times less risky than Steelpath Select. It trades about 0.02 of its potential returns per unit of risk. Steelpath Select 40 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 744.00 in Steelpath Select 40 on September 12, 2024 and sell it today you would earn a total of 18.00 from holding Steelpath Select 40 or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Steelpath Select 40
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Steelpath Select |
Franklin Lifesmart and Steelpath Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Steelpath Select
The main advantage of trading using opposite Franklin Lifesmart and Steelpath Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Steelpath Select 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 Steelpath Select will offset losses from the drop in Steelpath Select's long position.| Franklin Lifesmart vs. Pace High Yield | Franklin Lifesmart vs. Metropolitan West High | Franklin Lifesmart vs. Calvert High Yield | Franklin Lifesmart vs. Ab Global Risk |
| Steelpath Select vs. Omni Small Cap Value | Steelpath Select vs. Amg River Road | Steelpath Select vs. Fidelity Small Cap | Steelpath Select vs. Palm Valley Capital |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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