Correlation Between Franklin Lifesmart and Vanguard Target
Can any of the company-specific risk be diversified away by investing in both Franklin Lifesmart and Vanguard Target 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 Target 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 Vanguard Target Retirement, you can compare the effects of market volatilities on Franklin Lifesmart and Vanguard Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Lifesmart and Vanguard Target.
Diversification Opportunities for Franklin Lifesmart and Vanguard Target
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franklin and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Lifesmart 2025 and Vanguard Target Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Target Reti 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 Vanguard Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Target Reti has no effect on the direction of Franklin Lifesmart i.e., Franklin Lifesmart and Vanguard Target go up and down completely randomly.
Pair Corralation between Franklin Lifesmart and Vanguard Target
Assuming the 90 days horizon Franklin Lifesmart is expected to generate 1.09 times less return on investment than Vanguard Target. But when comparing it to its historical volatility, Franklin Lifesmart 2025 is 1.07 times less risky than Vanguard Target. It trades about 0.09 of its potential returns per unit of risk. Vanguard Target Retirement is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,652 in Vanguard Target Retirement on September 4, 2024 and sell it today you would earn a total of 405.00 from holding Vanguard Target Retirement or generate 24.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Lifesmart 2025 vs. Vanguard Target Retirement
Performance |
| Timeline |
| Franklin Lifesmart 2025 |
| Vanguard Target Reti |
Franklin Lifesmart and Vanguard Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Lifesmart and Vanguard Target
The main advantage of trading using opposite Franklin Lifesmart and Vanguard Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Lifesmart position performs unexpectedly, Vanguard Target 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 Target will offset losses from the drop in Vanguard Target's long position.| Franklin Lifesmart vs. Artisan High Income | Franklin Lifesmart vs. Gmo High Yield | Franklin Lifesmart vs. Blackrock High Yield | Franklin Lifesmart vs. Prudential High Yield |
| Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement | Vanguard Target vs. Vanguard Target Retirement |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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