Correlation Between Dimensional Retirement and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Dimensional 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 Dimensional 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 Dimensional Retirement Income and Franklin Lifesmart Retirement, you can compare the effects of market volatilities on Dimensional 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 Dimensional Retirement with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Retirement and Franklin Lifesmart.
Diversification Opportunities for Dimensional Retirement and Franklin Lifesmart
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Franklin Lifesmart Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart and Dimensional 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 Dimensional Retirement Income 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 Dimensional Retirement i.e., Dimensional Retirement and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Dimensional Retirement and Franklin Lifesmart
Assuming the 90 days horizon Dimensional Retirement is expected to generate 1.31 times less return on investment than Franklin Lifesmart. But when comparing it to its historical volatility, Dimensional Retirement Income is 1.42 times less risky than Franklin Lifesmart. It trades about 0.1 of its potential returns per unit of risk. Franklin Lifesmart Retirement is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 893.00 in Franklin Lifesmart Retirement on August 28, 2024 and sell it today you would earn a total of 166.00 from holding Franklin Lifesmart Retirement or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Retirement Income vs. Franklin Lifesmart Retirement
Performance |
| Timeline |
| Dimensional Retirement |
| Franklin Lifesmart |
Dimensional Retirement and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Retirement and Franklin Lifesmart
The main advantage of trading using opposite Dimensional Retirement and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 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.| Dimensional Retirement vs. Intal High Relative | Dimensional Retirement vs. Dfa International | Dimensional Retirement vs. Dfa Inflation Protected | Dimensional Retirement vs. Dfa International Small |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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