Correlation Between Payden Government and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Payden Government 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 Payden Government and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Payden Government 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 Payden Government with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Franklin Lifesmart.
Diversification Opportunities for Payden Government and Franklin Lifesmart
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Payden and Franklin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund 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 Payden Government 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 Payden Government Fund 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 Payden Government i.e., Payden Government and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Payden Government and Franklin Lifesmart
Assuming the 90 days horizon Payden Government Fund is expected to under-perform the Franklin Lifesmart. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden Government Fund is 2.86 times less risky than Franklin Lifesmart. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Franklin Lifesmart 2030 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,407 in Franklin Lifesmart 2030 on September 12, 2024 and sell it today you would earn a total of 44.00 from holding Franklin Lifesmart 2030 or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Payden Government Fund vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Payden Government |
| Franklin Lifesmart 2030 |
Payden Government and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Franklin Lifesmart
The main advantage of trading using opposite Payden Government and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government 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.| Payden Government vs. Payden Porate Bond | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Emerging Markets |
| Franklin Lifesmart vs. Hsbc Government Money | Franklin Lifesmart vs. Dws Government Money | Franklin Lifesmart vs. Payden Government Fund | Franklin Lifesmart vs. Schwab Government Money |
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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