Correlation Between Franklin Lifesmart and Franklin Balance
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Franklin Balance 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 Franklin Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Lifesmart 2025 and Franklin Balance Sheet, you can compare the effects of market volatilities on Franklin Lifesmart and Franklin Balance 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 Franklin Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Franklin Balance.
Diversification Opportunities for Franklin Lifesmart and Franklin Balance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Franklin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2025 and Franklin Balance Sheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Balance Sheet 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 2025 are associated (or correlated) with Franklin Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Balance Sheet has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Franklin Balance go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Franklin Balance
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 3.09 times less return on investment than Franklin Balance. But when comparing it to its historical volatility, Franklin Lifesmart 2025 is 2.47 times less risky than Franklin Balance. It trades about 0.28 of its potential returns per unit of risk. Franklin Balance Sheet is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,547 in Franklin Balance Sheet on September 3, 2024 and sell it today you would earn a total of 242.00 from holding Franklin Balance Sheet or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2025 vs. Franklin Balance Sheet
Performance |
| Timeline |
| Franklin Lifesmart 2025 |
| Franklin Balance Sheet |
Franklin Lifesmart and Franklin Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Franklin Balance
The main advantage of trading using opposite Franklin Lifesmart and Franklin Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Franklin Balance 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 Franklin Balance will offset losses from the drop in Franklin Balance's long position.| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. American Funds 2025 | Franklin Lifesmart vs. American Funds 2025 | Franklin Lifesmart vs. American Funds 2025 |
| Franklin Balance vs. Vanguard Institutional Short Term | Franklin Balance vs. Goldman Sachs Short | Franklin Balance vs. Jhancock Short Duration | Franklin Balance vs. Aqr Long Short Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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