Correlation Between Franklin Lifesmart and Mutual Of
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Mutual Of 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 Mutual Of 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 Mutual Of America, you can compare the effects of market volatilities on Franklin Lifesmart and Mutual Of 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 Mutual Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Mutual Of.
Diversification Opportunities for Franklin Lifesmart and Mutual Of
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Mutual is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America 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 Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Mutual Of go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Mutual Of
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.46 times more return on investment than Mutual Of. However, Franklin Lifesmart Retirement is 2.17 times less risky than Mutual Of. It trades about 0.1 of its potential returns per unit of risk. Mutual Of America is currently generating about -0.01 per unit of risk. If you would invest 1,044 in Franklin Lifesmart Retirement on November 28, 2024 and sell it today you would earn a total of 6.00 from holding Franklin Lifesmart Retirement or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Mutual Of America
Performance |
| Timeline |
| Franklin Lifesmart |
| Mutual Of America |
Franklin Lifesmart and Mutual Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Mutual Of
The main advantage of trading using opposite Franklin Lifesmart and Mutual Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Mutual Of 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 Mutual Of will offset losses from the drop in Mutual Of's long position.| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Templeton Foreign Fund |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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