Correlation Between Franklin Lifesmart and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Aristotle Funds 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 Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart Retirement and Aristotle Funds Series, you can compare the effects of market volatilities on Franklin Lifesmart and Aristotle Funds 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 Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Aristotle Funds.
Diversification Opportunities for Franklin Lifesmart and Aristotle Funds
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Aristotle is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Aristotle Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Funds Series 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 Retirement are associated (or correlated) with Aristotle Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Funds Series has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Aristotle Funds go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Aristotle Funds
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 2.04 times less return on investment than Aristotle Funds. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 3.73 times less risky than Aristotle Funds. It trades about 0.14 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,495 in Aristotle Funds Series on September 1, 2024 and sell it today you would earn a total of 174.00 from holding Aristotle Funds Series or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Aristotle Funds Series
Performance |
| Timeline |
| Franklin Lifesmart |
| Aristotle Funds Series |
Franklin Lifesmart and Aristotle Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Aristotle Funds
The main advantage of trading using opposite Franklin Lifesmart and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Aristotle Funds 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 Aristotle Funds will offset losses from the drop in Aristotle Funds' long position.| Franklin Lifesmart vs. Goldman Sachs Large | Franklin Lifesmart vs. Alternative Asset Allocation | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. Aqr Large Cap |
| Aristotle Funds vs. Artisan Emerging Markets | Aristotle Funds vs. Pace International Emerging | Aristotle Funds vs. Rbc Emerging Markets | Aristotle Funds vs. Angel Oak Multi Strategy |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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