Correlation Between Franklin Lifesmart and T Rowe
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and T Rowe 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 T Rowe 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 T Rowe Price, you can compare the effects of market volatilities on Franklin Lifesmart and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and T Rowe.
Diversification Opportunities for Franklin Lifesmart and T Rowe
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FRANKLIN and RRTLX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and T Rowe go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and T Rowe
Assuming the 90 days horizon Franklin Lifesmart 2050 is expected to generate 1.95 times more return on investment than T Rowe. However, Franklin Lifesmart is 1.95 times more volatile than T Rowe Price. It trades about 0.09 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.1 per unit of risk. If you would invest 1,172 in Franklin Lifesmart 2050 on September 3, 2024 and sell it today you would earn a total of 437.00 from holding Franklin Lifesmart 2050 or generate 37.29% 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. T Rowe Price
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| T Rowe Price |
Franklin Lifesmart and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and T Rowe
The main advantage of trading using opposite Franklin Lifesmart and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 |
| T Rowe vs. Calamos Global Equity | T Rowe vs. Us Strategic Equity | T Rowe vs. Nationwide Global Equity | T Rowe vs. Us Vector Equity |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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