Correlation Between Franklin Lifesmart and Pimco Long-term
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Pimco Long-term 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 Pimco Long-term 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 Pimco Long Term Credit, you can compare the effects of market volatilities on Franklin Lifesmart and Pimco Long-term 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 Pimco Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Pimco Long-term.
Diversification Opportunities for Franklin Lifesmart and Pimco Long-term
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Pimco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Pimco Long Term Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Term 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 Pimco Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Term has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Pimco Long-term go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Pimco Long-term
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.5 times more return on investment than Pimco Long-term. However, Franklin Lifesmart Retirement is 2.01 times less risky than Pimco Long-term. It trades about 0.1 of its potential returns per unit of risk. Pimco Long Term Credit is currently generating about 0.02 per unit of risk. If you would invest 891.00 in Franklin Lifesmart Retirement on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Franklin Lifesmart Retirement or generate 18.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Pimco Long Term Credit
Performance |
| Timeline |
| Franklin Lifesmart |
| Pimco Long Term |
Franklin Lifesmart and Pimco Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Pimco Long-term
The main advantage of trading using opposite Franklin Lifesmart and Pimco Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Pimco Long-term 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 Pimco Long-term will offset losses from the drop in Pimco Long-term's long position.| Franklin Lifesmart vs. Bbh Intermediate Municipal | Franklin Lifesmart vs. Transamerica Intermediate Muni | Franklin Lifesmart vs. Dws Government Money | Franklin Lifesmart vs. T Rowe Price |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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