Correlation Between Small Company and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Small Company 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 Small Company and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Small Company 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 Small Company with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Franklin Lifesmart.
Diversification Opportunities for Small Company and Franklin Lifesmart
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Company 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 Small Pany 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 2030 has no effect on the direction of Small Company i.e., Small Company and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Small Company and Franklin Lifesmart
Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Franklin Lifesmart. In addition to that, Small Company is 4.59 times more volatile than Franklin Lifesmart 2030. It trades about -0.12 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about 0.11 per unit of volatility. If you would invest 1,419 in Franklin Lifesmart 2030 on November 28, 2024 and sell it today you would earn a total of 13.00 from holding Franklin Lifesmart 2030 or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Small Pany Growth |
| Franklin Lifesmart 2030 |
Small Company and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Franklin Lifesmart
The main advantage of trading using opposite Small Company and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Franklin Lifesmart vs. Davis Financial Fund | Franklin Lifesmart vs. Goldman Sachs Financial | Franklin Lifesmart vs. Fidelity Advisor Financial | Franklin Lifesmart vs. Fidelity Advisor Financial |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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