Correlation Between Mutual Quest and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Mutual Quest 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 Mutual Quest and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Quest and Franklin Lifesmart 2055, you can compare the effects of market volatilities on Mutual Quest 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 Mutual Quest with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Quest and Franklin Lifesmart.
Diversification Opportunities for Mutual Quest and Franklin Lifesmart
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mutual and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Quest and Franklin Lifesmart 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2055 and Mutual Quest 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 Mutual Quest 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 2055 has no effect on the direction of Mutual Quest i.e., Mutual Quest and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Mutual Quest and Franklin Lifesmart
Assuming the 90 days horizon Mutual Quest is expected to generate 1.28 times less return on investment than Franklin Lifesmart. But when comparing it to its historical volatility, Mutual Quest is 1.24 times less risky than Franklin Lifesmart. It trades about 0.09 of its potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,021 in Franklin Lifesmart 2055 on December 1, 2024 and sell it today you would earn a total of 396.00 from holding Franklin Lifesmart 2055 or generate 38.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mutual Quest vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Mutual Quest |
| Franklin Lifesmart 2055 |
Mutual Quest and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Quest and Franklin Lifesmart
The main advantage of trading using opposite Mutual Quest and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Quest 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.| Mutual Quest vs. Commodities Strategy Fund | Mutual Quest vs. Dws Emerging Markets | Mutual Quest vs. Rbc Emerging Markets | Mutual Quest vs. Pnc Emerging Markets |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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