Correlation Between Rational Defensive and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Rational Defensive 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 Rational Defensive and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Defensive Growth and Franklin Lifesmart 2020, you can compare the effects of market volatilities on Rational Defensive 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 Rational Defensive with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Defensive and Franklin Lifesmart.
Diversification Opportunities for Rational Defensive and Franklin Lifesmart
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rational and Franklin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Franklin Lifesmart 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2020 and Rational Defensive 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 Rational Defensive Growth 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 2020 has no effect on the direction of Rational Defensive i.e., Rational Defensive and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Rational Defensive and Franklin Lifesmart
Assuming the 90 days horizon Rational Defensive Growth is expected to generate 2.24 times more return on investment than Franklin Lifesmart. However, Rational Defensive is 2.24 times more volatile than Franklin Lifesmart 2020. It trades about 0.44 of its potential returns per unit of risk. Franklin Lifesmart 2020 is currently generating about 0.28 per unit of risk. If you would invest 3,755 in Rational Defensive Growth on September 4, 2024 and sell it today you would earn a total of 287.00 from holding Rational Defensive Growth or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Rational Defensive Growth vs. Franklin Lifesmart 2020
Performance |
| Timeline |
| Rational Defensive Growth |
| Franklin Lifesmart 2020 |
Rational Defensive and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Defensive and Franklin Lifesmart
The main advantage of trading using opposite Rational Defensive and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Defensive 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.| Rational Defensive vs. Shelton Emerging Markets | Rational Defensive vs. Jpmorgan Emerging Markets | Rational Defensive vs. Transamerica Emerging Markets | Rational Defensive vs. Templeton Developing Markets |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |