Correlation Between Franklin Lifesmart and Monthly Rebalance
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Monthly Rebalance 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100, you can compare the effects of market volatilities on Franklin Lifesmart and Monthly Rebalance 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 Monthly Rebalance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Monthly Rebalance.
Diversification Opportunities for Franklin Lifesmart and Monthly Rebalance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Monthly is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Monthly Rebalance Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monthly Rebalance 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 Monthly Rebalance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monthly Rebalance has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Monthly Rebalance go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Monthly Rebalance
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.16 times more return on investment than Monthly Rebalance. However, Franklin Lifesmart Retirement is 6.31 times less risky than Monthly Rebalance. It trades about 0.1 of its potential returns per unit of risk. Monthly Rebalance Nasdaq 100 is currently generating about -0.08 per unit of risk. If you would invest 1,045 in Franklin Lifesmart Retirement on November 29, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Monthly Rebalance Nasdaq 100
Performance |
| Timeline |
| Franklin Lifesmart |
| Monthly Rebalance |
Franklin Lifesmart and Monthly Rebalance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Monthly Rebalance
The main advantage of trading using opposite Franklin Lifesmart and Monthly Rebalance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Monthly Rebalance 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 Monthly Rebalance will offset losses from the drop in Monthly Rebalance's long position.| Franklin Lifesmart vs. Federated Government Income | Franklin Lifesmart vs. Bbh Partner Fund | Franklin Lifesmart vs. Dreyfusstandish Global Fixed | Franklin Lifesmart vs. Ms Global Fixed |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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