Correlation Between Franklin Lifesmart and Tiaa-cref Lifestyle
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Tiaa-cref Lifestyle 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 Tiaa-cref Lifestyle 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 Tiaa Cref Lifestyle Conservative, you can compare the effects of market volatilities on Franklin Lifesmart and Tiaa-cref Lifestyle 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 Tiaa-cref Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Tiaa-cref Lifestyle.
Diversification Opportunities for Franklin Lifesmart and Tiaa-cref Lifestyle
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Tiaa-cref is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Tiaa Cref Lifestyle Conservati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifestyle 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 Tiaa-cref Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifestyle has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Tiaa-cref Lifestyle go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Tiaa-cref Lifestyle
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 1.0 times more return on investment than Tiaa-cref Lifestyle. However, Franklin Lifesmart Retirement is 1.0 times less risky than Tiaa-cref Lifestyle. It trades about 0.16 of its potential returns per unit of risk. Tiaa Cref Lifestyle Conservative is currently generating about 0.13 per unit of risk. If you would invest 1,052 in Franklin Lifesmart Retirement on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Franklin Lifesmart Retirement or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Tiaa Cref Lifestyle Conservati
Performance |
| Timeline |
| Franklin Lifesmart |
| Tiaa Cref Lifestyle |
Franklin Lifesmart and Tiaa-cref Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Tiaa-cref Lifestyle
The main advantage of trading using opposite Franklin Lifesmart and Tiaa-cref Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Tiaa-cref Lifestyle 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 Tiaa-cref Lifestyle will offset losses from the drop in Tiaa-cref Lifestyle's long position.| Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Aquagold International | Franklin Lifesmart vs. Barloworld Ltd ADR | Franklin Lifesmart vs. Morningstar Unconstrained Allocation |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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