Correlation Between Saat Moderate and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Saat Moderate 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 Saat Moderate and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saat Moderate Strategy and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Saat Moderate 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 Saat Moderate with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Moderate and Franklin Lifesmart.
Diversification Opportunities for Saat Moderate and Franklin Lifesmart
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Saat and Franklin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Saat Moderate Strategy and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Saat Moderate 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 Saat Moderate Strategy 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 Saat Moderate i.e., Saat Moderate and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Saat Moderate and Franklin Lifesmart
Assuming the 90 days horizon Saat Moderate Strategy is expected to under-perform the Franklin Lifesmart. But the mutual fund apears to be less risky and, when comparing its historical volatility, Saat Moderate Strategy is 1.08 times less risky than Franklin Lifesmart. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Franklin Lifesmart Retirement is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,063 in Franklin Lifesmart Retirement on August 28, 2024 and sell it today you would lose (4.00) from holding Franklin Lifesmart Retirement or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saat Moderate Strategy vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Saat Moderate Strategy |
| Franklin Lifesmart |
Saat Moderate and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saat Moderate and Franklin Lifesmart
The main advantage of trading using opposite Saat Moderate and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Moderate 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.| Saat Moderate vs. Rbb Fund | Saat Moderate vs. Falcon Focus Scv | Saat Moderate vs. Abr 7525 Volatility | Saat Moderate vs. Scharf Global Opportunity |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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