Correlation Between Franklin Lifesmart and Qs Moderate
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Qs Moderate 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 Qs Moderate 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 Qs Moderate Growth, you can compare the effects of market volatilities on Franklin Lifesmart and Qs Moderate 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 Qs Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Qs Moderate.
Diversification Opportunities for Franklin Lifesmart and Qs Moderate
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and SCGCX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Qs Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Moderate Growth 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 Qs Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Moderate Growth has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Qs Moderate go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Qs Moderate
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to under-perform the Qs Moderate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Lifesmart Retirement is 1.97 times less risky than Qs Moderate. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Qs Moderate Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,818 in Qs Moderate Growth on August 28, 2024 and sell it today you would earn a total of 33.00 from holding Qs Moderate Growth or generate 1.82% 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. Qs Moderate Growth
Performance |
| Timeline |
| Franklin Lifesmart |
| Qs Moderate Growth |
Franklin Lifesmart and Qs Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Qs Moderate
The main advantage of trading using opposite Franklin Lifesmart and Qs Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Qs Moderate 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 Qs Moderate will offset losses from the drop in Qs Moderate's long position.| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
| Qs Moderate vs. Clearbridge Aggressive Growth | Qs Moderate vs. Clearbridge Small Cap | Qs Moderate vs. Qs International Equity | Qs Moderate vs. Clearbridge Appreciation Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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