Correlation Between Franklin Moderate and Target Retirement
Can any of the company-specific risk be diversified away by investing in both Franklin Moderate and Target Retirement 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 Target Retirement 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 Target Retirement 2040, you can compare the effects of market volatilities on Franklin Moderate and Target Retirement 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 Target Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Moderate and Target Retirement.
Diversification Opportunities for Franklin Moderate and Target Retirement
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Target is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Moderate Allocation and Target Retirement 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Retirement 2040 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 Target Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Retirement 2040 has no effect on the direction of Franklin Moderate i.e., Franklin Moderate and Target Retirement go up and down completely randomly.
Pair Corralation between Franklin Moderate and Target Retirement
Assuming the 90 days horizon Franklin Moderate Allocation is expected to generate 0.85 times more return on investment than Target Retirement. However, Franklin Moderate Allocation is 1.18 times less risky than Target Retirement. It trades about 0.35 of its potential returns per unit of risk. Target Retirement 2040 is currently generating about 0.27 per unit of risk. If you would invest 1,578 in Franklin Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Franklin Moderate Allocation or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Moderate Allocation vs. Target Retirement 2040
Performance |
| Timeline |
| Franklin Moderate |
| Target Retirement 2040 |
Franklin Moderate and Target Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Moderate and Target Retirement
The main advantage of trading using opposite Franklin Moderate and Target Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Moderate position performs unexpectedly, Target Retirement 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 Target Retirement will offset losses from the drop in Target Retirement'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 |
| Target Retirement vs. Science Technology Fund | Target Retirement vs. Blackrock Science Technology | Target Retirement vs. Fidelity Advisor Technology | Target Retirement vs. Biotechnology Ultrasector Profund |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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