Correlation Between Victory Global and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Victory Global 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 Victory Global and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory Global Natural and Franklin Lifesmart 2060, you can compare the effects of market volatilities on Victory Global 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 Victory Global with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Global and Franklin Lifesmart.
Diversification Opportunities for Victory Global and Franklin Lifesmart
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VICTORY and Franklin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Victory Global Natural and Franklin Lifesmart 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2060 and Victory Global 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 Victory Global Natural 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 2060 has no effect on the direction of Victory Global i.e., Victory Global and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Victory Global and Franklin Lifesmart
Assuming the 90 days horizon Victory Global Natural is expected to generate 1.82 times more return on investment than Franklin Lifesmart. However, Victory Global is 1.82 times more volatile than Franklin Lifesmart 2060. It trades about 0.15 of its potential returns per unit of risk. Franklin Lifesmart 2060 is currently generating about 0.03 per unit of risk. If you would invest 3,349 in Victory Global Natural on August 30, 2024 and sell it today you would earn a total of 234.00 from holding Victory Global Natural or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Victory Global Natural vs. Franklin Lifesmart 2060
Performance |
| Timeline |
| Victory Global Natural |
| Franklin Lifesmart 2060 |
Victory Global and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory Global and Franklin Lifesmart
The main advantage of trading using opposite Victory Global and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Global 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.| Victory Global vs. Ishares Municipal Bond | Victory Global vs. Nuveen Massachusetts Municipal | Victory Global vs. Baird Strategic Municipal | Victory Global vs. Federated Government Ultrashort |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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