Correlation Between Transamerica Capital and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Transamerica Capital 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 Transamerica Capital and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Capital Growth and Franklin Lifesmart 2030, you can compare the effects of market volatilities on Transamerica Capital 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 Transamerica Capital with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Capital and Franklin Lifesmart.
Diversification Opportunities for Transamerica Capital and Franklin Lifesmart
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transamerica and Franklin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Capital Growth 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 Transamerica Capital 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 Transamerica Capital Growth 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 Transamerica Capital i.e., Transamerica Capital and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Transamerica Capital and Franklin Lifesmart
Assuming the 90 days horizon Transamerica Capital Growth is expected to under-perform the Franklin Lifesmart. In addition to that, Transamerica Capital is 3.34 times more volatile than Franklin Lifesmart 2030. It trades about -0.08 of its total potential returns per unit of risk. Franklin Lifesmart 2030 is currently generating about -0.24 per unit of volatility. If you would invest 1,451 in Franklin Lifesmart 2030 on October 9, 2024 and sell it today you would lose (41.00) from holding Franklin Lifesmart 2030 or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Capital Growth vs. Franklin Lifesmart 2030
Performance |
| Timeline |
| Transamerica Capital |
| Franklin Lifesmart 2030 |
Transamerica Capital and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Capital and Franklin Lifesmart
The main advantage of trading using opposite Transamerica Capital and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Capital 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.The idea behind Transamerica Capital Growth and Franklin Lifesmart 2030 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Franklin Lifesmart vs. Us Vector Equity | Franklin Lifesmart vs. L Abbett Fundamental | Franklin Lifesmart vs. Semiconductor Ultrasector Profund | Franklin Lifesmart vs. Nasdaq 100 Profund Nasdaq 100 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |