Correlation Between College Retirement and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both College Retirement 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 College Retirement and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on College Retirement 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 College Retirement with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Franklin Lifesmart.
Diversification Opportunities for College Retirement and Franklin Lifesmart
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Franklin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and College Retirement 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 College Retirement Equities 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 College Retirement i.e., College Retirement and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between College Retirement and Franklin Lifesmart
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 2.24 times more return on investment than Franklin Lifesmart. However, College Retirement is 2.24 times more volatile than Franklin Lifesmart Retirement. It trades about 0.12 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.1 per unit of risk. If you would invest 32,448 in College Retirement Equities on September 12, 2024 and sell it today you would earn a total of 19,522 from holding College Retirement Equities or generate 60.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| College Retirement |
| Franklin Lifesmart |
College Retirement and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Franklin Lifesmart
The main advantage of trading using opposite College Retirement and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement 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.| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
| Franklin Lifesmart vs. Jpmorgan Smartretirement Income | Franklin Lifesmart vs. HUMANA INC | Franklin Lifesmart vs. Barloworld Ltd ADR | Franklin Lifesmart vs. Morningstar Unconstrained Allocation |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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