Correlation Between Franklin Lifesmart and Vanguard Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Vanguard Inflation-protec 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 Inflation-protec 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 Inflation Protected Securities, you can compare the effects of market volatilities on Franklin Lifesmart and Vanguard Inflation-protec 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 Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Vanguard Inflation-protec.
Diversification Opportunities for Franklin Lifesmart and Vanguard Inflation-protec
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Vanguard is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart Retirement and Vanguard Inflation Protected S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Inflation-protec 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 Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Inflation-protec has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Vanguard Inflation-protec go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Vanguard Inflation-protec
Assuming the 90 days horizon Franklin Lifesmart Retirement is expected to generate 1.05 times more return on investment than Vanguard Inflation-protec. However, Franklin Lifesmart is 1.05 times more volatile than Vanguard Inflation Protected Securities. It trades about 0.11 of its potential returns per unit of risk. Vanguard Inflation Protected Securities is currently generating about 0.04 per unit of risk. If you would invest 921.00 in Franklin Lifesmart Retirement on August 31, 2024 and sell it today you would earn a total of 142.00 from holding Franklin Lifesmart Retirement or generate 15.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Franklin Lifesmart Retirement vs. Vanguard Inflation Protected S
Performance |
| Timeline |
| Franklin Lifesmart |
| Vanguard Inflation-protec |
Franklin Lifesmart and Vanguard Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Vanguard Inflation-protec
The main advantage of trading using opposite Franklin Lifesmart and Vanguard Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Vanguard Inflation-protec 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 Inflation-protec will offset losses from the drop in Vanguard Inflation-protec's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. Jpmorgan Smartretirement Income | Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Aquagold International |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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