Correlation Between Pace Smallmedium and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Pace Smallmedium 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 Pace Smallmedium and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Value and Franklin Lifesmart 2055, you can compare the effects of market volatilities on Pace Smallmedium 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 Pace Smallmedium with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Smallmedium and Franklin Lifesmart.
Diversification Opportunities for Pace Smallmedium and Franklin Lifesmart
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pace and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Franklin Lifesmart 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2055 and Pace Smallmedium 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 Pace Smallmedium Value 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 2055 has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Pace Smallmedium and Franklin Lifesmart
Assuming the 90 days horizon Pace Smallmedium is expected to generate 1.16 times less return on investment than Franklin Lifesmart. In addition to that, Pace Smallmedium is 1.47 times more volatile than Franklin Lifesmart 2055. It trades about 0.05 of its total potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.09 per unit of volatility. If you would invest 1,132 in Franklin Lifesmart 2055 on September 12, 2024 and sell it today you would earn a total of 272.00 from holding Franklin Lifesmart 2055 or generate 24.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Smallmedium Value vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Pace Smallmedium Value |
| Franklin Lifesmart 2055 |
Pace Smallmedium and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Smallmedium and Franklin Lifesmart
The main advantage of trading using opposite Pace Smallmedium and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium 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.| Pace Smallmedium vs. Vanguard Small Cap Value | Pace Smallmedium vs. Vanguard Small Cap Value | Pace Smallmedium vs. Us Small Cap | Pace Smallmedium vs. Us Targeted Value |
| Franklin Lifesmart vs. Lsv Small Cap | Franklin Lifesmart vs. Pace Smallmedium Value | Franklin Lifesmart vs. Heartland Value Plus | Franklin Lifesmart vs. Boston Partners Small |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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