Correlation Between Franklin Lifesmart and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Federated Strategic 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 Strategic 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 Strategic Value, you can compare the effects of market volatilities on Franklin Lifesmart and Federated Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Federated Strategic.
Diversification Opportunities for Franklin Lifesmart and Federated Strategic
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Federated is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Federated Strategic go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Federated Strategic
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.32 times more return on investment than Federated Strategic. However, Franklin Lifesmart Retirement is 3.08 times less risky than Federated Strategic. It trades about 0.27 of its potential returns per unit of risk. Federated Strategic Value is currently generating about -0.25 per unit of risk. If you would invest 1,055 in Franklin Lifesmart Retirement on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Franklin Lifesmart Retirement or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Federated Strategic Value
Performance |
| Timeline |
| Franklin Lifesmart |
| Federated Strategic Value |
Franklin Lifesmart and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Federated Strategic
The main advantage of trading using opposite Franklin Lifesmart and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic'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 |
| Federated Strategic vs. Federated Emerging Market | Federated Strategic vs. Federated Mdt All | Federated Strategic vs. Federated Mdt Balanced | Federated Strategic vs. Federated Global Allocation |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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