Correlation Between Franklin Lifesmart and Miller Opportunity
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Miller Opportunity 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 Miller Opportunity 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 Miller Opportunity Trust, you can compare the effects of market volatilities on Franklin Lifesmart and Miller Opportunity 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 Miller Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Miller Opportunity.
Diversification Opportunities for Franklin Lifesmart and Miller Opportunity
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Miller is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Miller Opportunity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Opportunity Trust 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 Miller Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Opportunity Trust has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Miller Opportunity go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Miller Opportunity
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 10.29 times less return on investment than Miller Opportunity. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 4.33 times less risky than Miller Opportunity. It trades about 0.09 of its potential returns per unit of risk. Miller Opportunity Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,381 in Miller Opportunity Trust on August 29, 2024 and sell it today you would earn a total of 592.00 from holding Miller Opportunity Trust or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Miller Opportunity Trust
Performance |
| Timeline |
| Franklin Lifesmart |
| Miller Opportunity Trust |
Franklin Lifesmart and Miller Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Miller Opportunity
The main advantage of trading using opposite Franklin Lifesmart and Miller Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Miller Opportunity 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 Miller Opportunity will offset losses from the drop in Miller Opportunity'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 |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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