Correlation Between Franklin Real and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Franklin Real 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 Real 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 Real Estate and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Franklin Real 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 Real with a short position of Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Real and Lifex Inflation-protec.
Diversification Opportunities for Franklin Real and Lifex Inflation-protec
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Franklin and Lifex is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Real Estate 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 Real 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 Real Estate 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 Real i.e., Franklin Real and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Franklin Real and Lifex Inflation-protec
Assuming the 90 days horizon Franklin Real Estate is expected to generate 2.17 times more return on investment than Lifex Inflation-protec. However, Franklin Real is 2.17 times more volatile than Lifex Inflation Protected Income. It trades about 0.03 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.05 per unit of risk. If you would invest 1,743 in Franklin Real Estate on August 30, 2024 and sell it today you would earn a total of 255.00 from holding Franklin Real Estate or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 44.24% |
| Values | Daily Returns |
Franklin Real Estate vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Franklin Real Estate |
| Lifex Inflation-protec |
Franklin Real and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Real and Lifex Inflation-protec
The main advantage of trading using opposite Franklin Real and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Real 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 Real vs. Franklin Natural Resources | Franklin Real vs. HUMANA INC | Franklin Real vs. Aquagold International | Franklin Real vs. Barloworld Ltd ADR |
| Lifex Inflation-protec vs. Versatile Bond Portfolio | Lifex Inflation-protec vs. Ultra Short Fixed Income | Lifex Inflation-protec vs. Artisan High Income | Lifex Inflation-protec vs. Victory High Yield |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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