Correlation Between Franklin Moderate and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Lifex Inflation-protec 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 Moderate and Lifex Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Moderate Allocation and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Franklin Moderate and Lifex Inflation-protec 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 Moderate with a short position of Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Lifex Inflation-protec.
Diversification Opportunities for Franklin Moderate and Lifex Inflation-protec
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Lifex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec and Franklin Moderate 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 Moderate Allocation are associated (or correlated) with Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Franklin Moderate and Lifex Inflation-protec
Assuming the 90 days horizon Franklin Moderate Allocation is expected to generate 1.24 times more return on investment than Lifex Inflation-protec. However, Franklin Moderate is 1.24 times more volatile than Lifex Inflation Protected Income. It trades about 0.12 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.09 per unit of risk. If you would invest 1,509 in Franklin Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 120.00 from holding Franklin Moderate Allocation or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.64% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Franklin Moderate |
| Lifex Inflation-protec |
Franklin Moderate and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Lifex Inflation-protec
The main advantage of trading using opposite Franklin Moderate and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Lifex Inflation-protec 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 Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| Franklin Moderate vs. Jennison Natural Resources | Franklin Moderate vs. Oil Gas Ultrasector | Franklin Moderate vs. Clearbridge Energy Mlp | Franklin Moderate vs. Alpsalerian Energy Infrastructure |
| Lifex Inflation-protec vs. The Hartford Healthcare | Lifex Inflation-protec vs. Health Care Fund | Lifex Inflation-protec vs. Fidelity Advisor Health | Lifex Inflation-protec vs. Prudential Health Sciences |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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