Correlation Between Mesirow Financial and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial 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 Mesirow Financial and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Mesirow Financial 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 Mesirow Financial with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Franklin Lifesmart.
Diversification Opportunities for Mesirow Financial and Franklin Lifesmart
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesirow and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Mesirow Financial 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 Mesirow Financial Small 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 has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Mesirow Financial and Franklin Lifesmart
Assuming the 90 days horizon Mesirow Financial Small is expected to under-perform the Franklin Lifesmart. In addition to that, Mesirow Financial is 4.77 times more volatile than Franklin Lifesmart Retirement. It trades about -0.13 of its total potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.01 per unit of volatility. If you would invest 1,047 in Franklin Lifesmart Retirement on October 26, 2024 and sell it today you would earn a total of 1.00 from holding Franklin Lifesmart Retirement or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Mesirow Financial Small |
| Franklin Lifesmart |
Mesirow Financial and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Franklin Lifesmart
The main advantage of trading using opposite Mesirow Financial and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial 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.| Mesirow Financial vs. T Rowe Price | Mesirow Financial vs. Transamerica Capital Growth | Mesirow Financial vs. Mid Cap Growth | Mesirow Financial vs. Growth Allocation Fund |
| Franklin Lifesmart vs. Dreyfusstandish Global Fixed | Franklin Lifesmart vs. T Rowe Price | Franklin Lifesmart vs. Gmo Global Equity | Franklin Lifesmart vs. Ab Servative Wealth |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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