Correlation Between Franklin Lifesmart and Voya Index
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Voya Index 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 Voya Index 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 Voya Index Solution, you can compare the effects of market volatilities on Franklin Lifesmart and Voya Index 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 Voya Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Voya Index.
Diversification Opportunities for Franklin Lifesmart and Voya Index
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Voya is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Voya Index Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Index Solution 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 Voya Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Index Solution has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Voya Index go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Voya Index
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.86 times less return on investment than Voya Index. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 1.93 times less risky than Voya Index. It trades about 0.16 of its potential returns per unit of risk. Voya Index Solution is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,854 in Voya Index Solution on September 14, 2024 and sell it today you would earn a total of 26.00 from holding Voya Index Solution or generate 1.4% 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. Voya Index Solution
Performance |
| Timeline |
| Franklin Lifesmart |
| Voya Index Solution |
Franklin Lifesmart and Voya Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Voya Index
The main advantage of trading using opposite Franklin Lifesmart and Voya Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Voya Index 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 Voya Index will offset losses from the drop in Voya Index'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 |
| Voya Index vs. Fidelity Managed Retirement | Voya Index vs. Qs Moderate Growth | Voya Index vs. Pro Blend Moderate Term | Voya Index vs. Franklin Lifesmart Retirement |
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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