Correlation Between Franklin Lifesmart and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Federated Mdt 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 Federated Mdt 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 Federated Mdt Balanced, you can compare the effects of market volatilities on Franklin Lifesmart and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Federated Mdt.
Diversification Opportunities for Franklin Lifesmart and Federated Mdt
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Federated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Federated Mdt Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Balanced 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Balanced has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Federated Mdt go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Federated Mdt
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.36 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Franklin Lifesmart Retirement is 1.64 times less risky than Federated Mdt. It trades about 0.09 of its potential returns per unit of risk. Federated Mdt Balanced is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,897 in Federated Mdt Balanced on August 24, 2024 and sell it today you would earn a total of 479.00 from holding Federated Mdt Balanced or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Federated Mdt Balanced
Performance |
| Timeline |
| Franklin Lifesmart |
| Federated Mdt Balanced |
Franklin Lifesmart and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Federated Mdt
The main advantage of trading using opposite Franklin Lifesmart and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Franklin Lifesmart vs. Touchstone Small Cap | Franklin Lifesmart vs. Ab Small Cap | Franklin Lifesmart vs. Artisan Small Cap | Franklin Lifesmart vs. The Hartford Small |
| Federated Mdt vs. Tiaa Cref Lifecycle Retirement | Federated Mdt vs. Pgim Conservative Retirement | Federated Mdt vs. Blackrock Moderate Prepared | Federated Mdt vs. Franklin Lifesmart Retirement |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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