Correlation Between Franklin Lifesmart and Live Oak
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Live Oak 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 Live Oak 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 Live Oak Health, you can compare the effects of market volatilities on Franklin Lifesmart and Live Oak 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 Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Live Oak.
Diversification Opportunities for Franklin Lifesmart and Live Oak
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Live is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health 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 Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Health has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Live Oak go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Live Oak
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.3 times more return on investment than Live Oak. However, Franklin Lifesmart Retirement is 3.31 times less risky than Live Oak. It trades about 0.36 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.04 per unit of risk. If you would invest 1,045 in Franklin Lifesmart Retirement on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Franklin Lifesmart Retirement or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Live Oak Health
Performance |
| Timeline |
| Franklin Lifesmart |
| Live Oak Health |
Franklin Lifesmart and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Live Oak
The main advantage of trading using opposite Franklin Lifesmart and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Live Oak 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 Live Oak will offset losses from the drop in Live Oak's long position.| Franklin Lifesmart vs. Advent Claymore Convertible | Franklin Lifesmart vs. Calamos Dynamic Convertible | Franklin Lifesmart vs. Virtus Convertible | Franklin Lifesmart vs. Allianzgi Convertible Income |
| Live Oak vs. Black Oak Emerging | Live Oak vs. Pin Oak Equity | Live Oak vs. Red Oak Technology | Live Oak vs. White Oak Select |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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