Correlation Between NYSE Composite and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Franklin Lifesmart 2030, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Franklin Lifesmart.
Diversification Opportunities for NYSE Composite and Franklin Lifesmart
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Franklin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between NYSE Composite and Franklin Lifesmart
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.28 times more return on investment than Franklin Lifesmart. However, NYSE Composite is 1.28 times more volatile than Franklin Lifesmart 2030. It trades about 0.14 of its potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about 0.09 per unit of risk. If you would invest 1,800,696 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 220,286 from holding NYSE Composite or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
NYSE Composite vs. Franklin Lifesmart 2030
Performance |
| Timeline |
NYSE Composite and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Franklin Lifesmart 2030
Pair trading matchups for Franklin Lifesmart
Pair Trading with NYSE Composite and Franklin Lifesmart
The main advantage of trading using opposite NYSE Composite and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Franklin Lifesmart vs. Gmo Small Cap | Franklin Lifesmart vs. Ab Small Cap | Franklin Lifesmart vs. Small Pany Growth | Franklin Lifesmart vs. Small Midcap Dividend Income |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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