Correlation Between Franklin Lifesmart and Tiaa Cref
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Tiaa Cref 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 Tiaa Cref 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 Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Franklin Lifesmart and Tiaa Cref 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 Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Tiaa Cref.
Diversification Opportunities for Franklin Lifesmart and Tiaa Cref
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Tiaa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2050 and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle 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 Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Tiaa Cref go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Tiaa Cref
Assuming the 90 days horizon Franklin Lifesmart 2050 is expected to generate 1.38 times more return on investment than Tiaa Cref. However, Franklin Lifesmart is 1.38 times more volatile than Tiaa Cref Lifecycle Index. It trades about 0.09 of its potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about 0.08 per unit of risk. If you would invest 1,285 in Franklin Lifesmart 2050 on September 12, 2024 and sell it today you would earn a total of 325.00 from holding Franklin Lifesmart 2050 or generate 25.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Franklin Lifesmart 2050 vs. Tiaa Cref Lifecycle Index
Performance |
| Timeline |
| Franklin Lifesmart 2050 |
| Tiaa Cref Lifecycle |
Franklin Lifesmart and Tiaa Cref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Tiaa Cref
The main advantage of trading using opposite Franklin Lifesmart and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Tiaa Cref 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 Tiaa Cref will offset losses from the drop in Tiaa Cref'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 |
| Tiaa Cref vs. Fidelity Advisor Diversified | Tiaa Cref vs. Wealthbuilder Conservative Allocation | Tiaa Cref vs. Calvert Conservative Allocation | Tiaa Cref vs. Western Asset Diversified |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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