Correlation Between Franklin Lifesmart and Sit Minnesota
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Sit Minnesota 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 Sit Minnesota 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 Sit Minnesota Tax Free, you can compare the effects of market volatilities on Franklin Lifesmart and Sit Minnesota 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 Sit Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Sit Minnesota.
Diversification Opportunities for Franklin Lifesmart and Sit Minnesota
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FRANKLIN and Sit is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Sit Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Minnesota Tax 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 Sit Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Minnesota Tax has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Sit Minnesota go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Sit Minnesota
Assuming the 90 days horizon Franklin Lifesmart 2050 is expected to generate 1.66 times more return on investment than Sit Minnesota. However, Franklin Lifesmart is 1.66 times more volatile than Sit Minnesota Tax Free. It trades about 0.29 of its potential returns per unit of risk. Sit Minnesota Tax Free is currently generating about 0.21 per unit of risk. If you would invest 1,559 in Franklin Lifesmart 2050 on September 4, 2024 and sell it today you would earn a total of 54.00 from holding Franklin Lifesmart 2050 or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Sit Minnesota Tax Free
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Sit Minnesota Tax |
Franklin Lifesmart and Sit Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Sit Minnesota
The main advantage of trading using opposite Franklin Lifesmart and Sit Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Sit Minnesota 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 Sit Minnesota will offset losses from the drop in Sit Minnesota'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 |
| Sit Minnesota vs. Blackrock Science Technology | Sit Minnesota vs. Mfs Technology Fund | Sit Minnesota vs. Fidelity Advisor Technology | Sit Minnesota vs. Towpath Technology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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