Correlation Between Prudential High and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Prudential High 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 Prudential High and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential High Yield and Franklin Lifesmart 2025, you can compare the effects of market volatilities on Prudential High 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 Prudential High with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential High and Franklin Lifesmart.
Diversification Opportunities for Prudential High and Franklin Lifesmart
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Franklin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Franklin Lifesmart 2025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2025 and Prudential High 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 Prudential High Yield 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 2025 has no effect on the direction of Prudential High i.e., Prudential High and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Prudential High and Franklin Lifesmart
Assuming the 90 days horizon Prudential High is expected to generate 1.23 times less return on investment than Franklin Lifesmart. But when comparing it to its historical volatility, Prudential High Yield is 1.61 times less risky than Franklin Lifesmart. It trades about 0.13 of its potential returns per unit of risk. Franklin Lifesmart 2025 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Franklin Lifesmart 2025 on September 12, 2024 and sell it today you would earn a total of 270.00 from holding Franklin Lifesmart 2025 or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential High Yield vs. Franklin Lifesmart 2025
Performance |
| Timeline |
| Prudential High Yield |
| Franklin Lifesmart 2025 |
Prudential High and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential High and Franklin Lifesmart
The main advantage of trading using opposite Prudential High and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential High 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.| Prudential High vs. SCOR PK | Prudential High vs. Morningstar Unconstrained Allocation | Prudential High vs. Via Renewables | Prudential High vs. Bondbloxx ETF Trust |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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