Correlation Between Franklin Lifesmart and Gmo Core
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Gmo Core 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 Gmo Core 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 Gmo E Plus, you can compare the effects of market volatilities on Franklin Lifesmart and Gmo Core 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 Gmo Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Gmo Core.
Diversification Opportunities for Franklin Lifesmart and Gmo Core
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Franklin and Gmo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Gmo E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo E Plus 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 Gmo Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo E Plus has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Gmo Core go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Gmo Core
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.86 times more return on investment than Gmo Core. However, Franklin Lifesmart Retirement is 1.16 times less risky than Gmo Core. It trades about 0.1 of its potential returns per unit of risk. Gmo E Plus is currently generating about 0.08 per unit of risk. If you would invest 1,052 in Franklin Lifesmart Retirement on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Franklin Lifesmart Retirement or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Gmo E Plus
Performance |
| Timeline |
| Franklin Lifesmart |
| Gmo E Plus |
Franklin Lifesmart and Gmo Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Gmo Core
The main advantage of trading using opposite Franklin Lifesmart and Gmo Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Gmo Core 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 Gmo Core will offset losses from the drop in Gmo Core'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 |
| Gmo Core vs. Gmo Treasury Fund | Gmo Core vs. Gmo Emerging Markets | Gmo Core vs. Gmo Emerging Markets | Gmo Core vs. Gmo Global Developed |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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