Correlation Between Franklin Lifesmart and Nuance Mid
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Nuance Mid 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 Nuance Mid 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 Nuance Mid Cap, you can compare the effects of market volatilities on Franklin Lifesmart and Nuance Mid 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 Nuance Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Nuance Mid.
Diversification Opportunities for Franklin Lifesmart and Nuance Mid
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Nuance is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2020 and Nuance Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuance Mid Cap 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 Nuance Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuance Mid Cap has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Nuance Mid go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Nuance Mid
Assuming the 90 days horizon Franklin Lifesmart 2020 is expected to generate 0.59 times more return on investment than Nuance Mid. However, Franklin Lifesmart 2020 is 1.69 times less risky than Nuance Mid. It trades about 0.1 of its potential returns per unit of risk. Nuance Mid Cap is currently generating about 0.05 per unit of risk. If you would invest 1,093 in Franklin Lifesmart 2020 on September 2, 2024 and sell it today you would earn a total of 188.00 from holding Franklin Lifesmart 2020 or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2020 vs. Nuance Mid Cap
Performance |
| Timeline |
| Franklin Lifesmart 2020 |
| Nuance Mid Cap |
Franklin Lifesmart and Nuance Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Nuance Mid
The main advantage of trading using opposite Franklin Lifesmart and Nuance Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Nuance Mid 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 Nuance Mid will offset losses from the drop in Nuance Mid's 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 |
| Nuance Mid vs. Chase Growth Fund | Nuance Mid vs. Small Midcap Dividend Income | Nuance Mid vs. Champlain Mid Cap | Nuance Mid vs. Growth Opportunities Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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