Correlation Between Franklin Lifesmart and Vanguard Intermediate-ter
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter 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 Vanguard Intermediate Term Treasury, you can compare the effects of market volatilities on Franklin Lifesmart and Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Vanguard Intermediate-ter.
Diversification Opportunities for Franklin Lifesmart and Vanguard Intermediate-ter
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Vanguard is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Vanguard Intermediate Term Tre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter 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 Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Vanguard Intermediate-ter go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Vanguard Intermediate-ter
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 0.84 times more return on investment than Vanguard Intermediate-ter. However, Franklin Lifesmart Retirement is 1.19 times less risky than Vanguard Intermediate-ter. It trades about 0.31 of its potential returns per unit of risk. Vanguard Intermediate Term Treasury is currently generating about 0.06 per unit of risk. If you would invest 1,044 in Franklin Lifesmart Retirement on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Franklin Lifesmart Retirement or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Vanguard Intermediate Term Tre
Performance |
| Timeline |
| Franklin Lifesmart |
| Vanguard Intermediate-ter |
Franklin Lifesmart and Vanguard Intermediate-ter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Vanguard Intermediate-ter
The main advantage of trading using opposite Franklin Lifesmart and Vanguard Intermediate-ter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Vanguard Intermediate-ter 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 Vanguard Intermediate-ter will offset losses from the drop in Vanguard Intermediate-ter's long position.| Franklin Lifesmart vs. Goldman Sachs Large | Franklin Lifesmart vs. Alternative Asset Allocation | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. Aqr Large Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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