Correlation Between Franklin Lifesmart and Astor Long/short
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Astor Long/short 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 Astor Long/short 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 Astor Longshort Fund, you can compare the effects of market volatilities on Franklin Lifesmart and Astor Long/short 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 Astor Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Astor Long/short.
Diversification Opportunities for Franklin Lifesmart and Astor Long/short
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Astor is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Long/short 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 Astor Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Long/short has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Astor Long/short go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Astor Long/short
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 3.3 times less return on investment than Astor Long/short. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 1.4 times less risky than Astor Long/short. It trades about 0.1 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,392 in Astor Longshort Fund on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Astor Longshort Fund or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Astor Longshort Fund
Performance |
| Timeline |
| Franklin Lifesmart |
| Astor Long/short |
Franklin Lifesmart and Astor Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Astor Long/short
The main advantage of trading using opposite Franklin Lifesmart and Astor Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Astor Long/short 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 Astor Long/short will offset losses from the drop in Astor Long/short's long position.| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
| Astor Long/short vs. Rbc Short Duration | Astor Long/short vs. Angel Oak Ultrashort | Astor Long/short vs. Quantitative Longshort Equity | Astor Long/short vs. Old Westbury Short Term |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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