Correlation Between Franklin Lifesmart and Putnam Convertible
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Putnam Convertible 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 Putnam Convertible 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 Putnam Convertible Incm Gwth, you can compare the effects of market volatilities on Franklin Lifesmart and Putnam Convertible 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 Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Putnam Convertible.
Diversification Opportunities for Franklin Lifesmart and Putnam Convertible
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Putnam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm 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 Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Putnam Convertible go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Putnam Convertible
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.42 times more return on investment than Putnam Convertible. However, Franklin Lifesmart Retirement is 2.4 times less risky than Putnam Convertible. It trades about -0.07 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about -0.4 per unit of risk. If you would invest 1,047 in Franklin Lifesmart Retirement on December 10, 2024 and sell it today you would lose (5.00) from holding Franklin Lifesmart Retirement or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Putnam Convertible Incm Gwth
Performance |
| Timeline |
| Franklin Lifesmart |
| Putnam Convertible Incm |
Franklin Lifesmart and Putnam Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Putnam Convertible
The main advantage of trading using opposite Franklin Lifesmart and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Putnam Convertible 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 Putnam Convertible will offset losses from the drop in Putnam Convertible's long position.| Franklin Lifesmart vs. Aqr Long Short Equity | Franklin Lifesmart vs. Seix Govt Sec | Franklin Lifesmart vs. Blackrock Global Longshort | Franklin Lifesmart vs. Alpine Ultra Short |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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