Correlation Between Invesco Global and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Invesco Global and Franklin Lifesmart 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 Invesco Global and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Global Health and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Invesco Global and Franklin Lifesmart 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 Invesco Global with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Global and Franklin Lifesmart.
Diversification Opportunities for Invesco Global and Franklin Lifesmart
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and Franklin is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Global Health and Franklin Lifesmart 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2030 and Invesco Global 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 Invesco Global Health are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2030 has no effect on the direction of Invesco Global i.e., Invesco Global and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Invesco Global and Franklin Lifesmart
Assuming the 90 days horizon Invesco Global is expected to generate 2.74 times less return on investment than Franklin Lifesmart. In addition to that, Invesco Global is 1.42 times more volatile than Franklin Lifesmart 2030. It trades about 0.03 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about 0.1 per unit of volatility. If you would invest 1,314 in Franklin Lifesmart 2030 on September 1, 2024 and sell it today you would earn a total of 131.00 from holding Franklin Lifesmart 2030 or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Invesco Global Health vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Invesco Global Health |
| Franklin Lifesmart 2030 |
Invesco Global and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Global and Franklin Lifesmart
The main advantage of trading using opposite Invesco Global and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Global position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Invesco Global vs. Touchstone Ultra Short | Invesco Global vs. Vanguard Institutional Short Term | Invesco Global vs. Chartwell Short Duration | Invesco Global vs. Aqr Long Short Equity |
| Franklin Lifesmart vs. Baron Health Care | Franklin Lifesmart vs. Blackrock Health Sciences | Franklin Lifesmart vs. Highland Longshort Healthcare | Franklin Lifesmart vs. Invesco Global Health |
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 CEOs Directory module to screen CEOs from public companies around the world.
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