Correlation Between Franklin Lifesmart and Transamerica Funds
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Transamerica Funds 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 Transamerica Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2020 and Transamerica Funds , you can compare the effects of market volatilities on Franklin Lifesmart and Transamerica Funds 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 Transamerica Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Transamerica Funds.
Diversification Opportunities for Franklin Lifesmart and Transamerica Funds
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Franklin and Transamerica is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2020 and Transamerica Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Funds 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 2020 are associated (or correlated) with Transamerica Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Funds has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Transamerica Funds go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Transamerica Funds
If you would invest 1,258 in Franklin Lifesmart 2020 on September 2, 2024 and sell it today you would earn a total of 23.00 from holding Franklin Lifesmart 2020 or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2020 vs. Transamerica Funds
Performance |
| Timeline |
| Franklin Lifesmart 2020 |
| Transamerica Funds |
Franklin Lifesmart and Transamerica Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Transamerica Funds
The main advantage of trading using opposite Franklin Lifesmart and Transamerica Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Transamerica Funds 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 Transamerica Funds will offset losses from the drop in Transamerica Funds' long position.| Franklin Lifesmart vs. Science Technology Fund | Franklin Lifesmart vs. Global Technology Portfolio | Franklin Lifesmart vs. Janus Global Technology | Franklin Lifesmart vs. Allianzgi Technology Fund |
| Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard 500 Index | Transamerica Funds vs. Vanguard Total Stock | Transamerica Funds vs. Vanguard Total Stock |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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