Correlation Between Franklin Lifesmart and The Hartford
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and The Hartford 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 The Hartford 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 The Hartford Small, you can compare the effects of market volatilities on Franklin Lifesmart and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and The Hartford.
Diversification Opportunities for Franklin Lifesmart and The Hartford
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and The is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and The Hartford go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and The Hartford
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 6.73 times less return on investment than The Hartford. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 4.79 times less risky than The Hartford. It trades about 0.16 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,034 in The Hartford Small on August 30, 2024 and sell it today you would earn a total of 144.00 from holding The Hartford Small or generate 7.08% 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. The Hartford Small
Performance |
| Timeline |
| Franklin Lifesmart |
| Hartford Small |
Franklin Lifesmart and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and The Hartford
The main advantage of trading using opposite Franklin Lifesmart and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Aquagold International | Franklin Lifesmart vs. Barloworld Ltd ADR | Franklin Lifesmart vs. Morningstar Unconstrained Allocation |
| The Hartford vs. T Rowe Price | The Hartford vs. Dodge Cox Stock | The Hartford vs. Pace Large Growth | The Hartford vs. Upright Assets Allocation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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