Correlation Between Templeton World and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Templeton World 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 Templeton World and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Franklin Lifesmart 2055, you can compare the effects of market volatilities on Templeton World 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 Templeton World with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Franklin Lifesmart.
Diversification Opportunities for Templeton World and Franklin Lifesmart
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Templeton and Franklin is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund 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 Templeton World 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 Templeton World Fund 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 Templeton World i.e., Templeton World and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Templeton World and Franklin Lifesmart
Assuming the 90 days horizon Templeton World is expected to generate 1.74 times less return on investment than Franklin Lifesmart. In addition to that, Templeton World is 1.33 times more volatile than Franklin Lifesmart 2055. It trades about 0.04 of its total potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.08 per unit of volatility. If you would invest 1,378 in Franklin Lifesmart 2055 on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Franklin Lifesmart 2055 or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton World Fund vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Templeton World |
| Franklin Lifesmart 2055 |
Templeton World and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Franklin Lifesmart
The main advantage of trading using opposite Templeton World and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World 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.| Templeton World vs. T Rowe Price | Templeton World vs. Vanguard Emerging Markets | Templeton World vs. Multisector Bond Sma | Templeton World vs. Angel Oak Ultrashort |
| Franklin Lifesmart vs. Huber Capital Diversified | Franklin Lifesmart vs. Sentinel Small Pany | Franklin Lifesmart vs. Tiaa Cref Small Cap Blend | Franklin Lifesmart vs. Massmutual Premier Diversified |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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