Correlation Between Franklin Lifesmart and Columbia Diversified
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Columbia Diversified 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 Diversified 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 Diversified Equity, you can compare the effects of market volatilities on Franklin Lifesmart and Columbia Diversified 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 Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Columbia Diversified.
Diversification Opportunities for Franklin Lifesmart and Columbia Diversified
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Columbia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Columbia Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Diversified 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 Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Diversified has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Columbia Diversified go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Columbia Diversified
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.11 times more return on investment than Columbia Diversified. However, Franklin Lifesmart Retirement is 8.94 times less risky than Columbia Diversified. It trades about 0.2 of its potential returns per unit of risk. Columbia Diversified Equity is currently generating about -0.23 per unit of risk. If you would invest 1,053 in Franklin Lifesmart Retirement on September 18, 2024 and sell it today you would earn a total of 8.00 from holding Franklin Lifesmart Retirement or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Columbia Diversified Equity
Performance |
| Timeline |
| Franklin Lifesmart |
| Columbia Diversified |
Franklin Lifesmart and Columbia Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Columbia Diversified
The main advantage of trading using opposite Franklin Lifesmart and Columbia Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Columbia Diversified 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 Diversified will offset losses from the drop in Columbia Diversified's long position.| Franklin Lifesmart vs. Aqr Large Cap | Franklin Lifesmart vs. Jhancock Disciplined Value | Franklin Lifesmart vs. Touchstone Large Cap | Franklin Lifesmart vs. Qs Large Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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