Correlation Between Franklin Lifesmart and Alps/smith Short
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Alps/smith Short 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 Alps/smith Short 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 Alpssmith Short Duration, you can compare the effects of market volatilities on Franklin Lifesmart and Alps/smith Short 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 Alps/smith Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Alps/smith Short.
Diversification Opportunities for Franklin Lifesmart and Alps/smith Short
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FRANKLIN and Alps/smith is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Alpssmith Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpssmith Short Duration 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 Alps/smith Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpssmith Short Duration has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Alps/smith Short go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Alps/smith Short
Assuming the 90 days horizon Franklin Lifesmart 2050 is expected to generate 6.21 times more return on investment than Alps/smith Short. However, Franklin Lifesmart is 6.21 times more volatile than Alpssmith Short Duration. It trades about 0.09 of its potential returns per unit of risk. Alpssmith Short Duration is currently generating about 0.17 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Alpssmith Short Duration
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Alpssmith Short Duration |
Franklin Lifesmart and Alps/smith Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Alps/smith Short
The main advantage of trading using opposite Franklin Lifesmart and Alps/smith Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Alps/smith Short 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 Alps/smith Short will offset losses from the drop in Alps/smith Short'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 |
| Alps/smith Short vs. T Rowe Price | Alps/smith Short vs. Franklin Lifesmart 2050 | Alps/smith Short vs. T Rowe Price | Alps/smith Short vs. John Hancock Funds |
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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