Correlation Between Hawaiian Tax-free and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Hawaiian Tax-free 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 Hawaiian Tax-free and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaiian Tax Free Trust and Franklin Lifesmart 2050, you can compare the effects of market volatilities on Hawaiian Tax-free 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 Hawaiian Tax-free with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Tax-free and Franklin Lifesmart.
Diversification Opportunities for Hawaiian Tax-free and Franklin Lifesmart
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and FRANKLIN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Tax Free Trust and Franklin Lifesmart 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2050 and Hawaiian Tax-free 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 Hawaiian Tax Free Trust 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 2050 has no effect on the direction of Hawaiian Tax-free i.e., Hawaiian Tax-free and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Hawaiian Tax-free and Franklin Lifesmart
Assuming the 90 days horizon Hawaiian Tax-free is expected to generate 3.74 times less return on investment than Franklin Lifesmart. But when comparing it to its historical volatility, Hawaiian Tax Free Trust is 2.62 times less risky than Franklin Lifesmart. It trades about 0.19 of its potential returns per unit of risk. Franklin Lifesmart 2050 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,559 in Franklin Lifesmart 2050 on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Franklin Lifesmart 2050 or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Tax Free Trust vs. Franklin Lifesmart 2050
Performance |
| Timeline |
| Hawaiian Tax Free |
| Franklin Lifesmart 2050 |
Hawaiian Tax-free and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Tax-free and Franklin Lifesmart
The main advantage of trading using opposite Hawaiian Tax-free and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Tax-free 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.| Hawaiian Tax-free vs. Franklin Lifesmart 2050 | Hawaiian Tax-free vs. Hood River New | Hawaiian Tax-free vs. T Rowe Price | Hawaiian Tax-free vs. Legg Mason Partners |
| Franklin Lifesmart vs. Vanguard Target Retirement | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 | Franklin Lifesmart vs. American Funds 2050 |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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