Correlation Between Franklin Lifesmart and Columbia Dividend
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Columbia Dividend 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 Columbia Dividend 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 Columbia Dividend Income, you can compare the effects of market volatilities on Franklin Lifesmart and Columbia Dividend 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 Columbia Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Columbia Dividend.
Diversification Opportunities for Franklin Lifesmart and Columbia Dividend
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Columbia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Columbia Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Dividend Income 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 Columbia Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Dividend Income has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Columbia Dividend go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Columbia Dividend
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.97 times less return on investment than Columbia Dividend. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 1.83 times less risky than Columbia Dividend. It trades about 0.12 of its potential returns per unit of risk. Columbia Dividend Income is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,218 in Columbia Dividend Income on September 1, 2024 and sell it today you would earn a total of 482.00 from holding Columbia Dividend Income or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Columbia Dividend Income
Performance |
| Timeline |
| Franklin Lifesmart |
| Columbia Dividend Income |
Franklin Lifesmart and Columbia Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Columbia Dividend
The main advantage of trading using opposite Franklin Lifesmart and Columbia Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Columbia Dividend 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 Columbia Dividend will offset losses from the drop in Columbia Dividend's 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 |
| Columbia Dividend vs. Qs Large Cap | Columbia Dividend vs. Touchstone Large Cap | Columbia Dividend vs. Morningstar Unconstrained Allocation | Columbia Dividend vs. Old Westbury Large |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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